ANZ sells S$500m Basel 3 bonds at 3.75%

AUSTRALIA and New Zealand Banking Group Limited has sold S$500 million Basel 3 Tier 2 bonds.

This is the first Basel 3 compliant T2 SGD bond for an Australian bank, said Clifford Lee, DBS Bank head of fixed income Tuesday.

"They issued in SGD because of the benefits of diversifying their investor base at a compelling pricing level, and the fact that the SGD bond market is deep enough to accommodate a meaningful benchmark issuance size," said Mr Lee.

The 12-year non-call 7-year bonds were priced at 3.75 per cent.

Non-call 7-year means the bonds will not be called or redeemed until 23 March 2022; thereafter, if not called, a one time reset for the remaining five years at the five-year SGD swap offer rate on 23 March 2022 plus 137.2 basis points.

Orders for the issue were over S$700 million.

Institutional investors dominated the issue. Insurers got 68 per cent, followed by fund managers (16 per cent), private banks (11 per cent) and banks (5 per cent).

Singapore investors had an overwhelming 89 per cent of the deal. The remainder came from Taiwan, Australia, Hong Kong and Malaysia.

This is "another sign that the SGD bond market is firming up further. This time we are seeing strong non-private bank participation," said Mr Lee.

ANZ, DBS, HSBC and United Overseas Bank handled the issue.

Basel 3 compliant bonds can be written off or converted into capital if a "non-viability trigger event" occurs.