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UOB Secured Bond Pricing Overview

UOB has recently announced the pricing of €850 million in secured bonds, set to mature in 2030 and offering an attractive annual coupon rate of 2.718%. This significant financial event took place in Singapore and has garnered considerable attention within the financial community.

The bonds saw an impressive oversubscription, with orders surpassing €1.2 billion. The investor interest was primarily from asset managers, banks, central banks, and formal institutions, indicating a strong demand for this kind of investment.

First of Its Kind in Recent Years

This issuance marks a significant milestone as the first five-year secured euro bond from a Singaporean bank since October 2021. Furthermore, it has been identified as the most tightly priced five-year secured euro bond issued outside the EU since September 2022. Such distinctions not only extend the pricing curve for Singaporean issuers but also enhance the credibility of UOB in international financial markets.

Competitive Pricing Strategies

UOB continues to demonstrate its positioning within the market by recalibrating its pricing curves, achieving a tightening of one basis point. The bonds were set at mid-swap +30 basis points, a competitive rate one basis point below theoretical values. This strategic maneuver reflects UOB’s ability to optimize its offerings in the secured bond market, achieving a tightening of three to five-year curves, where the yield spread between mid-swap rates for three and five years contracted by seven basis points, contrasting with the normal ten basis points spread.

According to Koh Chin Chin, UOB's Group Treasurer and Head of Client Solutions, the bank is delighted to make a return to the euro secured bond market, expressing gratitude to their investors. She acknowledged that this issuance allowed Singapore to extend its curves at one of the tightest prices for a non-European issuer in recent years.

Highlights of the Bond Offering

1. Leading the Market: This secured euro bond is the first five-year issuance from a Singapore bank since late 2021, indicating UOB’s leadership in this niche segment.
2. Market Relevance: The bond represents the most stringent five-year secured euro issuance outside the EU since 2022, reinforcing UOB’s collaboration with stringent financial standards.

Distribution Statistics

The final order book showcased overwhelming demand with a final figure exceeding €1.2 billion, comprising 36 investors. The breakdown of the demand shows:

• - Asset Managers: Approximately 40%
• - Banks: Roughly 29%
• - Central Banks/Official Institutions: Close to 28%
• - Insurance/Pension Funds: About 2%
• - Financial Institutions: 1%

The geographical distribution of the bonds reflects a diverse investor base:

• - Switzerland: 28%
• - Germany: 26%
• - United Kingdom: 19%
• - Nordic Region: 14%
• - Benelux: 12%
• - Others: 1%

Overall, UOB's strategic issuance of these secured bonds not only underscores their reputation in the market but also enhances the positioning of Singapore as a key player in the financial sector on a global scale. The successful fundraising reflects UOB’s robust financial standing and the growing confidence among global investors in Singaporean banks.

As the financial landscape continues to evolve, UOB’s innovation in secured bond offerings sets a benchmark for future issuances, showcasing resilience and strategic foresight in a competitive market.