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UOB pilots digital bond issuance on Marketnode platform
S$600 million offering aims to support Singapore’s digital capital markets growth and Sora rate transition
The Asset 16 Jun 2021

United Overseas Bank has tapped Marketnode’s digital platform to issue its latest bond offering – perpetual, non-call seven-year additional Tier 1 (AT1) capital securities amounting to S$600 million (US$452 million).

Marketnode, a joint venture between Singapore Exchange and Temasek, is an exchange-led digital asset platform focused on capital market workflows through smart contracts, ledger and tokenization technologies. It leverages distributed ledger technology to connect various parties involved in the transaction – from issuers to investors – and tokenize the capital security, so that smart contracts can be created and conducted for greater efficiency. The digital bond runs parallel with the conventional issuance process.

The offering is the industry’s first public capital issuance to reference the Singapore Overnight Rate Average Overnight Indexed Swap (Sora-OIS) rate.

Wee Ee Cheong, UOB’s deputy chairman and chief executive officer, says: “UOB is fully behind the development of Singapore’s digital capital markets infrastructure and the smooth transition to a Sora-centred financial market. We are pleased to be the first financial institution to support Marketnode’s exchange-led network in our dual role as a major Singapore dollar bond issuer and bond house. As more global issuers and investors come on board and participate in Singapore’s digital capital markets, we will see further strengthening of Singapore’s status as the region’s financial hub.”

The bank’s AT1 securities have been priced at a fixed coupon rate of 2.55%, the lowest for benchmark perpetual securities for banks in Singapore. The offering had a final orderbook of more than S$1 billion from a total of 73 accounts.

The deal saw a subscription rate of 1.7 times, including institutional accounts and private banking investors, which the bank says is a testament to its strong credit standing. About 92% of the investors are based in Singapore while rest are international offshore investors.

The perpetual capital securities are expected to be rated Baa1, BBB- and BBB+ by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings respectively.

UOB is the sole global coordinator and, together with Credit Suisse, Hongkong and Shanghai Banking Corporation and Standard Chartered Bank, the joint lead managers and joint bookrunners.

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