Singapore lender UOB continued to demonstrate its sustained engagement with Australian dollar investors, pricing on January 21 a dual-tranche bond offering totalling A$2 billion ( US$1.37 billion ). The transaction came just a week after the bank’s Singapore dollar bond issuance, which also illustrates its reliance on local currency markets for funding.

The Australian dollar deal, conducted through UOB’s Sydney branch, comprised of a five-year A$1.25 billion 5.023% fixed-rate senior unsecured notes and a five-year A$750 million senior unsecured floating rate notes ( FRNs ), which were priced at 72bp over the three-month bank bill swap rate ( BBSW ).

At this level, the deal was priced at 2bp inside the most recent five-year senior bond issuance by Commonwealth Bank of Australia, which printed a dual-tranche deal totalling A$5 billion in early January. It was the tightest five-year Australian dollar senior unsecured transaction globally since UOB’s own five-year Australian dollar bond issuance in November 2021.

UOB offered both floating and fixed rate tranches to maximize investor participation given the strong investor demand for five-year notes due to the higher spread and yield offered amid the multi-year tight spread environment. The transaction was announced on January 20, and the strong combined order book of over A$3.38 billion overnight gave UOB the confidence to launch the transaction the following day.

Koh Chin Chin, head of group treasury, research and customer advocacy at UOB, says the bank is happy to have offered investors relative value through its choice in tenor while achieving its objectives in both size and pricing. “We are very pleased to have seen the continued strong support from the investor community despite the global markets sentiment softening this week,” she adds.

The transaction attracted a final order book of over A$4.97 billion after peaking at A$5.42 billion. For the fixed rate tranche, 62% of the bond was distributed in Australia/New Zealand, 37% in Asia and 1% in EMEA. By type of investors, fund managers, corporates and official institutions accounted for 58% of the paper; banks 37%; private banks, hedge funds and other investors 2%; and money market funds 3%. The 58% share by fund managers, corporates and official institutions is one of the highest real money participations in Australian dollar bond offerings from non-domestic banks. This strong investor interest also resulted in UOB being able to print the largest non-domestic five-year fixed rate tranche.

For the FRN tranche, Australia/New Zealand accounted for 54% in terms of the geographical allocation, Asia 45%, and EMEA 1%. Banks were the biggest investors with 63%, followed by fund managers, corporates and official institutions with 29%, private banks, hedge funds and other investors 5%, and money market funds 3%

The bonds were drawn from UOB’s US$30 billion global medium-term note programme. ANZ, UOB and Westpac Banking Corporation were the joint bookrunners and lead managers for the transaction.

The latest Australian bond deal is UOB’s second bond transaction this month after printing an S$850 million ( US$659 million ) perpetual non-call seven additional tier 1 bond on January 14, the proceeds of which are intended to qualify as regulatory capital of the bank.