The covered bonds will bear a fixed coupon of 1.625% per annum payable semi-annually in arrear, equal to a spread of 37 basis points over mid-swaps, well below the level for new senior unsecured USD debt issues by bank issuers of similar rating to DBS.
The competitive pricing of this issue follows the announcement of the group’s strong first half 2015 financial results and a successful roadshow in Asia, Europe and the United States. DBS was also granted the ECBC Covered Bond Label on 29 June 2015. This quality label was the first granted by The Covered Bond Label Foundation to an issuer outside the European Economic Area, and further enhanced visibility of DBS’s covered bond initiative to global investors.
The issue attracted orders of approximately USD1.37 billion from over 40 investors, with banks anchoring the order book and accounting for 62% of orders. Orders were received across 16 countries with a high level of representation from Asia at 51%.
DBS Chief Financial Officer Chng Sok Hui said, “We are very pleased with the strong interest received from global investors in our first covered bond issuance, which allowed us to price at tight spreads even under current difficult bond market conditions. With the issue, we have been able to engage a fresh group of investors, and access liquidity with greater cost efficiency, lowering our overall funding cost.”
“This inaugural issuance is a milestone for the Singapore covered bond market and it paves the way for greater participation in the future by investors and issuers in this new asset class. As the largest bank in Singapore and a leading bank in Asia, we are proud to have taken the lead in opening up this market.” DBS, Deutsche Bank, J.P. Morgan and Société Générale were mandated as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners, and Barclays and Citibank as Joint Lead Managers and Joint Bookrunners for the issue.
The issue is expected to be rated Aaa/AAA by Moody's and Fitch. Covered bonds are rated higher than senior unsecured debt as investors have recourse to both the issuer and a portfolio of mortgage loans and other assets. The expected Aaa/AAA ratings would allow banks to hold DBS’s covered bonds as high quality liquid assets and count towards Basel’s liquidity coverage ratio requirement.
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About DBS DBS - Living, Breathing AsiaDBS is a leading financial services group in Asia, with over 280 branches across 18 markets. Headquartered and listed in Singapore, DBS has a growing presence in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's capital position, as well as "AA-" and "Aa1" credit ratings, is among the highest in Asia-Pacific. DBS has been recognised for its leadership in the region, having been named “Asia’s Best Bank” by The Banker, a member of the Financial Times group, and “Best Bank in Asia-Pacific” by Global Finance. The bank has also been named “Safest Bank in Asia” by Global Finance for six consecutive years from 2009 to 2014.
DBS provides a full range of services in consumer, SME and corporate banking activities across Asia. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. These market insights and regional connectivity have helped to drive the bank’s growth as it sets out to be the Asian bank of choice. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all of our 21,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.
