United Overseas Bank (Malaysia) (UOBM) on April 22 priced an upsized one billion ringgit (US$278 million) Basel III-compliant tier 2 subordinated bonds, representing the first such issuance by a foreign bank incorporated in Malaysia.

The 10-year non-call five deal was priced at par with a coupon and yield of 4.65%, or in line with the revised price guidance of 4.65% area (+/- 5bp). On an absolute basis, the yield was the lowest ever achieved for a Basel III-compliant tier 2 subordinated bonds in the ringgit market.

The transaction was announced in the morning of April 22 with an initial guidance of between 4.60% and 4.75%. Given the scarcity of the offering, orders quickly built up during the morning session and reached 2.5 billion ringgit by noon. Demand continued to pour in during the course of the day and by mid-afternoon, the order book grew in excess of 3.4 billion ringgit.

Amid the strong investor reception, the arrangers revised the price guidance to 4.65% area (+/- 5bp), and UOBM decided to double the deal amount from the initial 500 million ringgit.

Proceeds from the transaction will be used for general banking purposes and to replenish UOBM’s tier 2 capital following the redemption in March this year of the 500 million ringgit tier 2 subordinated bonds. The bonds were widely distributed among pension funds, insurance companies, asset managers, corporates, banks and private banks – both foreign and domestic.

CIMB Investment Bank and UOBM acted as the joint principal advisers and lead arrangers for the transaction, as well as joint lead managers, along with HSBC.