UOB issues Singapore’s first Panda bond

The integration of Asia’s financial markets gathers pace with the inaugural Panda bond emanating from Singapore, the second such bond printed via a Southeast Asian institution

United Overseas Bank (UOB) became the first Singapore issuer to tap the Panda bond market when it printed on March 13 a two billion renminbi (US$298 million) offering that garnered a strong investor demand. Panda bonds are renminbi-denominated bonds sold in China by a foreign issuer.

The three-year issue was priced at 3.49%, which was described as one of the lowest rates among all Panda bonds issued to date. The deal, which enabled UOB to diversify its investor base, was covered 2.7x with demand coming from asset managers and commercial bank investors across Asia. The paper was distributed with 38% going to China’s onshore investors and 62% to international offshore investors.

UOB deputy chairman and group CEO Wee Ee Cheong describes the Panda issuance as another milestone in UOB’s long-standing commitment to supporting greater financial market connectivity in the region. “Through this offering, we can diversify our funding sources and continue to tap the increased connectivity between China and Asean arising from the Belt and Road initiative to serve our customers’ needs,” he adds.

Proceeds from the bonds will be used to support the group’s banking business and development in China. The deal was actually the second Panda offering from the group after United Overseas Bank (China) issued an onshore financial bond in April 2018. Both issuances are rated AAA by China Chengxin International Credit Rating Company with stable outlooks.

Bank of China acted as the lead underwriter and lead bookrunner for the transaction, while China Securities Company and Standard Chartered (China) were the joint lead underwriters and joint bookrunners.

The transaction represented the second Panda bond issued by a Southeast Asian financial institution. In July 2017, Maybank of Malaysia printed the first-ever financial Panda offering amounting to one billion renminbi, whose focus was to finance projects and activities relating to Belt and Road initiatives. The three-year issue was priced at 4.60%, or just above the mid-range of the initial price guidance of between 4% and 5%.

UOB’s commitment to China commenced in 1984 with the establishment of its Beijing representative office. It reinforced that commitment in November last year with the opening of a new headquarters building in Lujiazui financial district in Shanghai.

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