Corporate Financing Analysis - Singapore Showing Asia The Covered Bond Way - 20 MAR 2017


With Asian companies looking to expand and diversify both their funding streams and their investor bases, it is to be expected that the popularity of covered bonds is continuing to grow across the region. Further fanning the flames of interest is the fact that covered bonds offer investors low-risk debt, an appealing prospect in light of China's recent economic woes and the fact that the climate of uncertainty and fear that has embraced capital markets over the past year is still taking some time to thaw.

To this end, Singapore banking major United Overseas Bank (UOB) upped the covered bond ante in Asia last month by doing something that no other Asian company has done before, issuing a dual-tranche covered bond deal. The country's third largest bank by assets successfully sold its note in both US dollars and euros to raise USD1.28bn from debt capital market (dcm) investors enthused by the bumper mortgage-backed security sale. We note that the composition of the deal, which was arranged by a quintet of banks including Deutsche Bank, DZ Ban, HSBC, UBS and UOB itself was made up of a USD500mn three-year note carrying a 2.125% coupon and a USD528mn five-year note (sold in euros) carrying a 0.125% coupon.

UOB Leading The Way

Steady Growth
Singapore Commercial Banking Sector Loan & Deposit Growth, 2015 Vs 2016
Source: BMI, Central Bank, Regulators

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