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UOB raises 500m euros in its first euro-denominated covered bond issue

Thursday, March 3, 2016 - 08:23

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UOB said on Thursday it has raised 500 million euros (S$760 million) through its euro-denominated fixed-rate covered bonds, making it the first Asian bank to issue such bonds.

UOB said on Thursday it has raised 500 million euros (S$760 million) through its euro-denominated fixed-rate covered bonds, making it the first Asian bank to issue such bonds.

The covered bonds will bear a fixed coupon of 0.25 per cent per annum payable annually in arrears. The transaction's order book was 2.6 times subscribed.

The covered bonds attracted more than 75 institutional investors, predominantly from Europe. Banks took up 36 per cent of the issue, fund managers absorbed another 31 per cent, while central banks and insurance funds took up 18 per cent and 10 per cent respectively.

UOB's euro-denominated covered bonds are backed by a portfolio of mortgage loans linked to residential properties in Singapore. They are expected to be rated "AAA" by Standard & Poor's Ratings Services and "Aaa" by Moody's Investors Service this week, the bank said.

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The covered bonds issuance is the first series under UOB's US$8 billion global covered bond programme, which was established on Nov 23, 2015. UOB said the issue has enabled the bank to broaden its funding sources and to expand its investor base to Europe.

"Despite the current volatility and uncertainty in the financial markets, UOB's covered bonds garnered strong investor interest, showing the confidence that global investors have in the sovereign standing of Singapore as well as the fundamentals of the country's economy and housing market," said Lee Wai Fai, chief financial officer at UOB, in a media statement.

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