The long-awaited covered bonds out of Singapore is finally happening as DBS Bank embarks on a roadshow commencing on June 22 to gauge investor interest on the product.
The bank has mandated DBS, Deutsche Bank, J.P. Morgan and Societe Generale CIB as joint global coordinators to arrange a series of investor update meetings in Asia, Europe and the US to introduce its newly-established US$10 billion global covered bond programme.
A euro or a US dollar covered bond transaction may follow, subject to market conditions, targeting institutional investors. The net proceeds from the issuance will be used for the general business purposes of the DBS Group.
The global covered bond programme, under which DBS will issue covered bonds from time to time, is a first for the Singapore market. Covered bonds are rated higher than unsecured debt, often attaining the AAA rating as investors have recourse to both the issuer and a portfolio of assets. As DBS points out, issuing covered bonds enables the banks to reach investors in high grade securities
In launching the programme, DBS chief financial officer Chng Sok Hui says DBS is committed to pioneering capital market developments that bring value to both issuers and investors. “For DBS, the programme enables us to engage a fresh group of investors and to access liquidity with greater cost efficiency,” she says. “This will lower our overall funding cost.”
DBS and Barclays were the joint arrangers of the global covered bond programe, as well as dealers along with Citi, Deutsche Bank, J.P. Morgan, Societe Generale CIB and UniCredit Bank.
