#Singapore #Covered Bonds #UOB

UOB Issues €850 Million Covered Bonds

United Overseas Bank (UOB), a prominent financial institution, has announced the pricing of covered bonds totaling €850 million, set to mature in 2030. These bonds feature an appealing annual coupon rate of 2.718%, demonstrating UOB’s robust position in the financial market.

The issuance was met with outstanding interest, as evidenced by an order book exceeding €1.2 billion. The demand predominantly came from reputable investors, including asset managers, banks, central banks, and official institutions. Notably, this issuance marks the first five-year covered bond from a Singaporean bank since October 2021, a significant milestone that extends the pricing curve for issuers from Singapore. Additionally, these bonds represent the tightest pricing for a non-EU five-year covered bond since September 2022.

Koh Chin Chin, Head of Group Treasury, Research, and Customer Advocacy at UOB, expressed her enthusiasm regarding the successful return to the market for covered Euro bonds. She thanked investors for their unwavering support, enabling UOB to set the curve for Singapore with the closest five-year pricing for a non-EU issuer in recent years. This reflects UOB’s commitment to meeting investor expectations while fostering market confidence.

Furthermore, UOB effectively lowered the Singapore curve by one basis point (bps), setting the final pricing at Mid-Swap (MS) plus 30 bps, which is one bps below the fair value. The issuer managed to achieve a tighter three-to-five-year curve, which indicates a reduced yield spread between the three-year and five-year EUR Mid-Swap—a significant accomplishment given the standard curve typically sits at a 10 bps spread for EUR covered bonds.

In comparison to its USD senior new issuance curve, UOB demonstrated a highly competitive pricing strategy within the EUR covered bond market. This move further broadens the limits of the continuously narrowing spreads for EUR covered bonds. The distribution statistics from this transaction highlight a well-diversified investor base:

• - Final Order Book: Over €1.2 billion, including €200 million from joint lead managers across 36 accounts.
• - Investor Demand Breakdown: Asset managers: ~40%, banks: ~29%, central banks/official institutions: ~28%, insurance/pension funds: ~2%, financial institutions: ~1%.
• - Geographic Distribution: Switzerland: ~28%, Germany: ~26%, United Kingdom: ~19%, Nordic region: ~14%, Benelux: ~12%, others: ~1%.

This latest issuance not only reaffirms UOB’s strategic objectives but also positions it favorably for future market activities. Investors can feel secure knowing that UOB is committed to maintaining competitive offerings while supporting the financial interests of its clientele. As UOB continues to navigate the evolving landscape of covered bonds, the bank solidifies its reputation as a trusted partner in the global banking sector.

In conclusion, the successful pricing of these covered bonds is an encouraging sign for UOB and underscores its strength and resilience in an increasingly competitive market. The interest and support received from various investor segments signify confidence in UOB's strategic direction and operational excellence.