UOB issues largest 3-year panda bond among foreign issuers at 5 billion yuan

UOB has successfully priced a three-year, five billion yuan (S$923 million) bond at 2.3 per cent, marking its first panda bond, or yuan note from offshore issuers, in China’s domestic interbank market since 2019.

The transaction also represents the largest issue size for a three-year tenor among foreign financial issuers, the bank said on Tuesday (Oct 22). 

The final coupon of 2.3 per cent represents a spread of 46 basis points over the three-year China Development Bank benchmark bond yield, it noted.

UOB, the only Singaporean bank in the panda bond market, also announced that it will apply for the bond to be listed on the Singapore Exchange (SGX), subject to regulatory approval. This will be the first time for a financial institution to list a panda bond on SGX.

The bank added that its latest transaction “reopens” the panda bond market for global financial institution issuers following “substantial bond market swings” tied to risk sentiment changes in China after the Golden Week holidays.

Koh Chin Chin, UOB’s head of group treasury, research and customer advocacy, said: “We have always been excited to participate in the growth of the panda bond market. We were the first Singaporean panda issuer in 2019 and, riding on the back of the rapidly growing capacity of this market, our latest issuance is also the largest from a foreign financial issuer with a three-year tenor.” The bank also noted that the bond garnered “strong demand” with a subscription ratio of 1.73 times from both onshore and offshore investors. It was also “well-received” by both existing and new investors, with the latter accounting for over 20 per cent of allocations.

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The panda bond is rated “AAA” by China Chengxin International Credit Rating. Bank of China was the lead underwriter and lead bookrunner while China Construction Bank, China Securities, China Zheshang Bank, Citic Securities, Deutsche Bank (China), Fubon Bank (China), Industrial and Commercial Bank of China, Industrial Bank, Standard Chartered Bank (China) and Sumitomo Mitsui Banking Corporation (China) were joint lead underwriters and joint bookrunners.

UOB shares fell S$0.25 Singapore cents or 0.77 per cent to S$32.23, as at 4.08 pm on Tuesday.