UOB prices 850 million euro bonds due 2030 at 2.718%

[SINGAPORE] UOB said on Tuesday (Nov 25) that it has priced 850 million euros (S$1.3 billion) in fixed-rate covered bonds due 2030.

The covered bonds will bear interest at 2.718 per cent per annum, payable annually in arrear.

The bonds, which are part of the lender’s US$15 billion global covered bond programme, are expected to be rated “Aaa” by Moody’s Investors Service and “AAA” by Standard & Poor’s Ratings.

Payments of interest and principal will be guaranteed by Glacier Eighty, secured by a portfolio of loans purchased by the company from the bank and other assets of the company.

The bonds are expected to be listed on the Singapore Exchange on Dec 1. 

UOB, BNP Paribas, HSBC, Landesbank Hessen-Thuringen Girozentrale and Societe Generale have been appointed as the joint lead managers for this issue.

The lender said the bonds were oversubscribed with an order book of more than 1.2 billion euros, with investor demand largely from asset managers, banks, central banks and official institutions.

The issuance was the longest tenor outstanding euro-denominated covered bond from Singapore and the first five-year covered bond since October 2021.

Most of the investors were from Switzerland, Germany, the UK, the Nordic region and the Benelux region.

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UOB said it managed to price the bond slightly cheaper than what the market normally expects, saving about one basis point in funding cost. It also got better pricing on the longer five-year part of the deal, narrowing the usual gap between three and five-year rates to seven basis points instead of the typical 10.

Koh Chin Chin, UOB’s head of group treasury, research and customer advocacy, said: “We are pleased to return to the euro covered bond market and thank investors’ continued support in allowing us to extend the curve for Singapore at the tightest five-year pricing for a non-European Union issuer in recent years.”

Shares of UOB rose 0.1 per cent to close S$0.04 higher at S$33.89 on Monday.