UOB prices $750 million of 3.58% perpetual securities

United Overseas Bank's securities are expected to be rated Baa1 by Moody's Investors Service, BBB-by Standard & Poor's Rating Services and BBB by Fitch Ratings, said the bank. ST PHOTO: LIM YAOHUI
United Overseas Bank's securities are expected to be rated Baa1 by Moody's Investors Service, BBB-by Standard & Poor's Rating Services and BBB by Fitch Ratings, said the bank. ST PHOTO: LIM YAOHUI

United Overseas Bank (UOB) has priced $750 million of 3.58 per cent Additional Tier 1 (AT1) perpetual capital securities at an initial spread of 1.795 per cent above the seven-year Singapore dollar Swap Offer Rate.

The issue price is on a par with the principal amount of the perpetual securities, and interest payment will be made semi-annually.

The securities may be redeemed by UOB on July 17, 2026, seven years after the expected issue date of July 17 this year or on any distribution payment date thereafter.

They are expected to be rated Baa1 by Moody's Investors Service, BBB-by Standard & Poor's Rating Services and BBB by Fitch Ratings, said UOB.

Standard & Poor's has already assigned the securities its BBB-rating, while Fitch Ratings has also confirmed its BBB rating, with final rating "subject to the receipt of final documentation".

The securities are issued under UOB's US$15 billion (S$20.3 billion) global medium-term note programme.

The bank is the sole global coordinator for the securities and a joint lead manager.

Other lead managers are Australia and New Zealand Banking Group, Standard Chartered Bank Singapore, HSBC Singapore and UBS Singapore.

The issue price is on a par with the principal amount of the perpetual securities, and interest payment will be made semi-annually.

Mr Sean McNelis, co-head of debt capital markets for Asia-Pacific at HSBC, said that UOB's ability to price a successful transaction at a record-breaking yield for a Singapore-dollar AT1 is a testament to the bank's strong credit and timing in bringing the transaction to market during the current attractive window.

"UOB's successful track record of issuance ensured the transaction received attention from both institutional and private banking investors during a day of heavy US dollar supply in the market," he added.

He also noted that UOB is a rare issuer in the Singdollar market, last accessing the market in 2017.

A version of this article appeared in the print edition of The Straits Times on July 12, 2019, with the headline 'UOB prices $750 million of 3.58% perpetual securities'. Print Edition | Subscribe