UOB prices S$850m in 5.25% perpetual capital securities, first callable in 2028

UOB has priced S$850 million in 5.25 per cent perpetual capital securities on Thursday (Jan 12), which will be first callable in 2028.

The capital securities will be issued under the US$30 billion global medium-term note programme, UOB : U11 0% said in a bourse filing on Friday (Jan 13). This “tight pricing” is backed by strong anchor demand from private wealth channels, the bank said.

The mainboard-listed company expects the capital securities will qualify as Additional Tier 1 regulatory capital for the bank.

It also expects the capital securities to be rated Baa1 by Moody’s Investors Service and BBB+ by Fitch Ratings.

The capital securities can be redeemed on the first reset date on Jan 19, 2028, or any distribution payment date thereafter, or upon the occurrence of certain redemption events specified in the terms and conditions of the capital securities, subject to approval by the Monetary Authority of Singapore.

Redemption of the perpetual capital securities will be at a rate equal to the then-prevailing five-year Singapore Overnight Rate Average Overnight Indexed Swap plus the initial spread of 2.39 per cent.

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UOB expects the capital securities to be issued on Jan 19, 2023. It is also the sole global coordinator and bookrunner for the capital securities.

The bank said that the deal was the first benchmark transaction in the SGD bond market this year. UOB added that the deal also opened the SGD bank capital market for the year, the latter which had been quiet since the last bank capital issuance was priced in August 2022.

This deal has an order book of more than S$2.1 billion, across more than 62 accounts, representing 2.5 times oversubscription, which UOB said is a “a display of a well-diversified investor base and granular order book”.

The majority of, or 85 per cent of the notes were allocated to private banks/securities houses; fund managers/insurance took 13 per cent; while banks/hedge funds/corporates took 2 per cent, according to deal statistics provided by UOB.

UOB’s head of group treasury and research, Koh Chin Chin, added that with rising global yields, household names with strong credit, such as UOB, becomes “even more attractive”, which drove the strong demand for the deal.

Similarly, UOB made an offer last June when it priced S$400 million of perpetual capital securities at a fixed distribution rate of 4.25 per cent per annum. It also did the same in June 2021 by pricing S$600 million of perpetual capital securities at 4.25 per cent per annum.

Shares of UOB closed 0.6 per cent lower or S$0.17 to S$29.92 on Thursday.