#Singapore #Covered Bonds #UOB #Singapore Bank

UOB Prices EUR850 Million Covered Bonds Amid Robust Investor Demand

In a significant move for the financial markets, UOB has announced the pricing of EUR850 million in covered bonds due in 2030, with an attractive coupon rate of 2.718% per annum. This issuance stands out not only for its substantial size but also as a landmark transaction in the Singapore banking sector, marking the first 5-year EUR covered bond issued by a bank from Singapore since October 2021.

The bonds, which garnered an oversubscribed order book exceeding EUR1.2 billion, indicate strong investor confidence, with interest primarily from asset managers, banks, central banks, and official institutions. This enthusiasm illustrates an increased appetite for quality bonds in the Euro market, reflecting a recovery from previous market fluctuations and economic uncertainties.

Notably, UOB's transaction extends the pricing curve for Singapore issuers, emphasizing the bank’s strategic intent to diversify its funding sources. The latest bond offering is also recognized as the tightest 5-year non-EU covered bond since September 2022, showcasing UOB's ability to achieve competitive pricing in a crowded marketplace. In a clear demonstration of market dynamics, UOB priced the bonds tighter than expected, landing 1 basis point inside fair value. This strategic pricing decision benefited from a successful crystallization of a tighter 3s5s curve—yielding just 7 basis points, compared to the more usual 10 basis points for EUR covered bonds.

Ms. Koh Chin Chin, UOB's Head of Group Treasury, Research & Customer Advocacy, expressed appreciation for the robust support from investors, stating, “We are pleased to return to the EUR covered bond market and thank investors' continued support in allowing us to extend the curve for Singapore at the tightest 5-year pricing for a non-EU issuer in recent years.” This confidence from the market reflects a nuanced understanding of bond valuations and investor risk appetites amidst evolving economic conditions.

Key Highlights of the Offering

• - This issuance marks UOB's return to the EUR covered bond space and the first of its kind in over two years from Singapore.
• - The final order book exceeded EUR1.2 billion, representing strong demand from a wide array of institutional investors worldwide.
• - The distribution showed significant interest breakdown: asset managers made up approximately 40%, banks comprised 29%, while central banks and official entities accounted for about 28%. Insurance and pension funds contributed around 2%, and financial institutions made up the remaining 1%.
• - Geographically, investors hailed from diverse regions, with a noteworthy portion coming from Switzerland (28%), Germany (26%), the United Kingdom (19%), the Nordic region (14%), and the Benelux area (12%).

UOB’s venture into the EUR bond market not only sets a precedent for future issuances but also plays a vital role in reshaping Singapore's profile as a significant player in global financing. The issuance's success paves the way for further financial initiatives and cements UOB’s reputation in the competitive banking landscape. With its innovative approaches and strategic focus, UOB continues to break new ground in the financial services industry.

Overall, this bond issuance heralds a positive outlook for Singapore's financial markets, showcasing resilience and adaptability in a rapidly changing economic environment. As UOB leads the way, the implications for future market opportunities remain encouraging, providing a blueprint for other institutions looking to optimize their capital structures and enhance their market positioning.