OCBC prices £1 billion floating rate covered bonds due 2029

[SINGAPORE] OCBC has priced £1 billion (US$1.4 billion) in aggregate principal amount of floating rate covered bonds due 2029, it announced on Thursday (Aug 20).

The covered bonds will bear interest at the compounded daily Sterling Overnight Index Average (Sonia) rate, plus 0.48 per cent per annum payable quarterly in arrear.

The Sonia rate is the average of the interest rates that banks pay to borrow the pound sterling from other financial institutions and institutional investors overnight.

Issued under the local lender’s US$10 billion global covered bond programme, the net proceeds will be used for general corporate purposes. The bonds are expected to be issued on Aug 26 and listed on the Singapore Exchange on Aug 27. Moody’s Investors Services is expected to rate the bonds Aaa, while Fitch Ratings is expected to assign an AAA rating.

Payments of interest and principal will be guaranteed by Red Sail, backed by a portfolio of assets purchased from OCBC. Aside from OCBC, Barclays Bank, Lloyds Bank Corporate Markets, RBC Europe, HSBC (Singapore Branch) and The Toronto-Dominion Bank served as joint lead managers for the transaction.

Shares of OCBC ended at S$30.94 on Wednesday, S$0.01 or 0.03 per cent lower.