SWISS bank Julius Baer's maiden sale of a Singapore dollar (SGD)-denominated, Basel III-compliant perpetual Additional Tier 1 (AT1) bonds has turned so hot that the bank has lowered the final price guidance to 6 per cent area.
The final price guidance is now 6 per cent area, plus or minus 10 basis points, according to the fifth and final update from the bookrunners.
Order books are circa S$1.8 billion with strong support from private bank investors, said Clifford Lee, DBS Bank's head of fixed income.
"It ticked all three boxes-familiar name, attractive yield and strong investment grade rating," said Mr Lee on the strong interest.
Citigroup, DBS Bank and UBS are handling the deal.
The initial price guidance for the offering, which was launched on Wednesday at 9am, was 6.375 per cent, and indication of interest quickly reached in excess of S$500 million half an hour after the sale began.
The Swiss bank last month said that it intends to sell SGD perpetual tier 1 subordinated bonds in a benchmark-sized volume - at a minimum of S$250 million to S$300 million - making it the first foreign bank to issue such a bond in the Singapore market.
The new bonds will likely be the highest-yielding AT1s in the SGD bond universe, since the existing AT1s are issued by the three local banks which are larger and have superior credit ratings, wrote iFAST in a note on the Julius Baer offering on Monday.