DBS prices US$1b perp deal at 3.3%, first callable in 2025

DBS Group on Friday announced it will issue US$1 billion of 3.3 per cent perpetual capital securities.

These are expected to qualify as additional tier-1 (AT1) capital of DBS Group. The unsecured, subordinated securities rank senior to DBS ordinary shares, pari passu with DBS's AT1 capital securities, but junior to all other claims of the group.

The coupon rate of 3.3 per cent is said to be the lowest for any AT1 US dollar deal done in the world.

The deal is NC5, which means it cannot be called or redeemed before the five-year mark. DBS has the option to redeem the securities on the first call date of Feb 27, 2025 or on any coupon payment date thereafter, subject to the prior approval of the Monetary Authority of Singapore.

If they are not called, the coupon rate will reset on Feb 27, 2025 and every five years thereafter to a rate equal to the then-prevailing five-year US dollar Treasury rate plus 1.915 per cent per annum.

The securities are expected to be issued on Feb 27, 2020, under the group's US$30 billion global medium-term note programme.

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More than US$5.5 billion of orders from 304 accounts were received for the deal, according to deal statistics seen by The Business Times (BT).

The bulk of the orders came from Asia (77 per cent), while the rest originated from Europe, the Middle East and Africa.

Asset managers and facility managers accounted for 73 per cent of the order book.

Net proceeds will be used for the finance and treasury activities of DBS Group, including the provision of intercompany loans or other forms of financing to DBS Bank and its subsidiaries.

DBS Bank was the sole global coordinator and structuring adviser for the offering. The joint lead managers were DBS Bank, Citigroup Global Markets Singapore, Société Générale and Wells Fargo Securities International.

The securities are expected to be rated Baa1(hyb) by Moody's Investors Services and BBB by Fitch Ratings. DBS Group as the issuer is rated Aa2 stable by Moody's and Aa- stable by Fitch.

Application will be made to list and quote the securities on the Singapore Exchange.

Shares of DBS Group were up S$0.08 or 0.3 per cent to S$25.18 as at 10.13am on Friday.