UOB prices Sonia benchmark covered bonds due 2026 in £850m issuance

UOB has priced £850 million (S$1.58 billion) of floating-rate covered bonds due 2026.

The final order book was in excess of £975 million, from an investor base comprising bank treasuries, central banks or official institutions and real money fund managers, the bank said on Wednesday.

The new issuance will use the Compounded Daily Sterling Overnight Interest Rate Average (Sonia) as its interest basis, making UOB the first issuer in Singapore to price a Sonia benchmark covered bond offering, it said in a press statement.

The offering was priced above par at 103.52 per cent, at a coupon rate of compounded daily Sonia plus 100 basis points, with a reoffer yield of 29 basis points above Sonia.

The covered bonds will be issued as the 10th series under UOB's US$8 billion global covered bond programme. UOB expects them to be rated Aaa by Moody's and AAA by S&P Global Ratings.

The bank added that the issuance is the "largest-ever" Sterling covered bond offering from an Asian issuer. UOB has issued 10 benchmark covered bonds, including its inaugural transaction in 2016, across global markets.

BNP Paribas, Credit Suisse International and UOB were the joint lead managers of this transaction. UOB expects to issue the covered bonds on Sept 21, 2021.

UOB group chief financial officer Lee Wai Fai said: "Since we launched the country's first Sterling-denominated covered bond in 2018, there is now greater clarity and established market conventions in the Sonia market."

The new issuance follows UOB's consent solicitation for the conversion of the interest basis for its £350 million floating rate covered bonds due 2023 from the Sterling Libor to Compounded Daily Sonia in July 2021.

UOB shares ended 1 per cent or S$0.26 higher at S$25.83 on Tuesday.