Singapore United Overseas Bank (UOB) priced its first tier 1 one deal on December 7, raising $500 million from a perpetual non-call 10 deal led by Credit Suisse First Boston, Deutsche Bank and JPMorgan.
Pricing came at par on a coupon of 5.796%, equating to a spread of 131bp over Treasuries or 74.5bp over mid-swaps. If the bank chooses not to call the bond, the coupon steps up an additional 100bp to its initial mid-swaps spread or Libor plus 174.5bp. The notes have a short first coupon paying out on March 15 next year.
The A2/A- rated deal was more than two times oversubscribed on a final order book of $1.25 billion with a total of 53 accounts taking part. Geographically the notes were sold down primarily to US-based investors, who took up 50% of book, with Asia accounting for 38% and Europe the remaining 12%.
In terms of account type, asset managers took 41%, insurers took 39%. Retail and private banks bought 12%, with the remaining 7% to banks.
Roadshows began last Thursday in Singapore before heading to Hong Kong on Friday and wrapping up in the US on Monday. Final pricing came slightly wider than the deal's initial guidance of 73.5bp over Libor, However, US Treasury spreads widened by 2bp to 3bp in the lead-up to pricing.
Pricing comps include: Development Bank of Singapore's 7.657% perp non-call March 2011; National Australia Banks 5.486% perpetual non-call March 2015; Royal Bank of Scotland's 5.512% perp non-call September 2014 and Westpac's 5.256% perp non-call March 2016. They were said to be trading around 65bp-70bp over mid-swaps range.
UOB last came to market with a dual currency subordinated notes issue raising $1 billion and S$1 billion ($609 million). That deal counted as upper tier two capital and has a 2019 maturity, with a step up in 2014. It priced at 114bps over Treasuries for the dollar tranche and 68bps over the swap offered rate for the Singapore dollar tranche.
Proceeds from the new deal will be used to improve the bank's capital standing. UOB's tier-1 CAR, as of October 1, is listed at 9.9% and has an overall CAR level of 15%.
Tier 1 capital comprises disclosed reserves, retained earnings and equity capital in the form of common equity, preferred equity and other subordinated instruments known as hybrids, which trade debt, but are treaty as equity.
