DBS Bank has raised over $1 billion from its DBS Global Income Note in the three months since its January launch, with its private banking clients showing strong interest, the bank said yesterday.
"As the hunt for yield continues to dominate in a lower-for-longer environment, the note presents a timely solution for income investors seeking capital preservation and a stable, consistent source of income," DBS said.
The open-ended note references the DBS Global Income Portfolio, a globally diversified and equally weighted portfolio of at least 100 mostly investment-grade bonds, across various geographies and sectors.
The portfolio is rebalanced every month, with its average duration adjusted using interest rate derivatives to manage portfolio interest rate risk, in line with the DBS chief investment office's target duration, the bank said.
In addition, all underlying bonds are monitored by DBS Group Research and DBS fixed income analysts on an ongoing basis, it added.
The note has a current payout of about 4.25 per cent per annum in US dollars, and pays out coupons to investors on a quarterly basis. It is also available in a Singdollar-hedged format.
The DBS Global Income Note is available to accredited investors from DBS Private Bank and DBS Treasures Private Client. The minimum investment sum is US$50,000 or $100,000. In comparison, the minimum trade size for a single non-retail bond stands at $250,000.
Ms Audra Seah, head of investment advisory and capital markets at DBS Private Bank, said: "With the hunt for yield remaining a consistent theme amid falling interest rates, narrowing credit spreads, and the inverted yield environment we're seeing today, we believe the launch of the DBS Global Income Note is timely.
"Demand for the DBS Global Income Note has been exceedingly strong... We structured the DBS Global Income Note to address income investors' need for greater stability and certainty by providing access to a highly diversified fixed income portfolio, for a relatively small investment amount."
She added that by including only actively monitored and mostly investment-grade bonds, investors need not keep close tabs on their portfolio, which would be challenging and time consuming in today's increasingly volatile environment.
DBS closed five cents, or 0.19 per cent, lower at $26.55 yesterday.