UOB’s maiden euro-denominated covered bonds issue rakes in $758m

It lured in more than 75 European institutional investors.

UOB raked in the big bucks with its first euro-denominated fixed-rate covered bonds issue, raising €500m, or about $758m, through global investors.

According to the bank’s announcement, the bonds are secured by a guarantee from Glacier Eighty backed by a portfolio of quality mortgage loans linked to Singapore residential properties. They are expected to receive top ratings this week from both Standard & Poor’s, as well as Moody’s.

The bonds will provide investors, particularly those from Europe, a chance to diversify their portfolio with covered bonds issued out of Singapore. They also allow UOB to widen its funding sources and to expand its investor base to Europe.

UOB CFO Wai Fai notes that the success of UOB’s bonds opens the door for other Asian financial institutions to reach the covered bonds investor base in Europe.

The bonds caught the eye of more than 75 institutional investors from Europe. Among the investors are banks (36%), fund managers (31%), central banks (18%), insurance funds (10%) and other (5%).

The bonds will bear a fixed coupon of 0.25% pa payable annually in arrears. UOB asserts the pricing is thanks to strong investor demand boosting the deal’s order book to more than €1.3b, or 2.6 times subscribed.

The bank further reports that it will channel the proceeds towards UOB’s general business purposes.

Photo by: TK Kurikawa / Shutterstock.com

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