DBS and other Asian banks tap US dollar bond markets for US$4.75 billion

AT LEAST two Asia Pacific banks, led by Commonwealth Bank and DBS Group, have aggressively tapped US dollar bond markets to raise US$4.75 billion in separate transactions, according to term sheets seen by Reuters.

CBA, which is Australia’s largest bank by market capitalisation, raised US$3.25 billion in three issuances with US$1.75 billion in a five-year covered bond, US$900 million in a two-year fixed rate note and US$600 million in a two-year floating rate note, a term sheet showed.

CBA declined to comment on the transaction.

Singapore’s biggest bank DBS Group tapped the US dollar bond markets for the first time in nearly two years as it raised US$1.5 billion.

The deals came amid a blitz of bonds launched on Tuesday in the US when there were 21 issuances worth US$31 billion, according to International Financing Review.

A post Labor-day rush of bond issuance in the US by global investment-grade-rated companies added renewed pressure on long-end US Treasuries, as some investors switched to buying top-rated corporate debt offering higher yields than those on government bonds.

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DBS, which is also South-east Asia’s largest lender, issued a two-year fixed rate bond that raised US$750 million and a two-year floating rate note that raised the same amount, the term sheet said.

The coupon on the fixed rate note was set at 5.479 per cent while the floating rate note was priced at the Secured Overnight Financing Rate plus 61 basis points.

Investors subscribed for more than US$2.65 billion of the two-year fixed rate bond, the term sheet showed.

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The floating rate note attracted over US$2 billion in orders from investors.

“The strong momentum of the order book, which was three times oversubscribed, is testament of the market’s confidence in DBS,” said Chng Sok Hui, chief financial officer of DBS Bank.

US and Asia-based investors bought nearly 90 per cent of the fixed bond and accounted for 98 per cent of the floating note, the term sheet showed.

DBS has flagged that the proceeds from the bonds would be used for its finance and treasury activities. REUTERS