DBS prices first issue of covered bonds

DBS prices first issue of covered bonds

The covered bonds, DBS’ first issue under a US$10 billion programme, will bear a fixed coupon of 1.625 per cent per annum payable semi-annually in arrear, the bank says.

POSTED: 30 Jul 2015 09:25

SINGAPORE: DBS Bank has priced its issue of US$1 billion (S$1.36 billion) fixed rate covered bonds due 2018, which is the first issue under a US$10 billion global covered bond programme, the bank said on Thursday (Jul 30).

The covered bonds will bear a fixed coupon of 1.625 per cent per annum payable semi-annually in arrear, equal to a spread of 37 basis points over mid-swaps, the bank said.

The issue attracted about US$1.37 billion (S$1.87 billion) of orders from more than 40 investors, with banks anchoring the order book and accounting for 62 per cent of orders. Orders were received from 16 countries, with 51 per cent coming from Asia.

DBS is the first issuer in Singapore to set up a covered bond programme after the local regulator tied up final changes to the rules related to the instrument. It is also the first issuer from South-East Asia to sell covered bonds in the offshore market.

The lender has mandated itself, Deutsche Bank, JP Morgan and Societe Generale as joint global coordinators for the debut covered bonds, with Barclays and Citigroup as bookrunners. The issue is expected to be rated Aaa by Moody's and AAA by Fitch.

DBS Chief Financial Officer Chng Sok Hui said: “We are very pleased with the strong interest received from global investors in our first covered bond issuance, which allowed us to price at tight spreads even under current difficult bond market conditions. With the issue, we have been able to engage a fresh group of investors, and access liquidity with greater cost efficiency, lowering our overall funding cost.”

- CNA/REUTERS/cy


- wong chee tat :)