New UOB 4.9% NC5 Perpetual Bond – No Meat Debut (Updated)

New Issue: UOBSP 4.90% PERP NC5Y
Issue size S$850M
SOR+319. Book size: S$2.0BN,

Deal stats:

By investor: PB 74%,
Insurance 11%,
FM/Banks 11%,
Public Sector Agencies: 4%.

By location:
Singapore 93%,
Others: 7%.

Market Price 100.00/100.15 now. (still in the money because I am hearing that private bankers got a decent rebate of 0.25 cts or thereabouts)

OCBC 4% perpetual suffered slightly. Price at 99/99.50 now.

How high can UOB go ? I would say maybe 1-2 cts higher at most. The mentality of most individual investors is that buying a bank bond is similar to a fixed deposit which is a trifle alarming. A preference share is not a fixed deposit.

With the untimely Moody’s announcement on the negative outlook for Singapore banks and investment climate that is still geared towards higher interest rates, it is no wonder that only the public is keen on this issue.

The other point to note is that the institutional appetite for perpetuals have been adversely affected by Basel 3.

Given this stats, it looks like we could have a retail SGX issue in the works for the rest of the public.

S&P Comments taken from article today.

SINGAPORE (Standard & Poor’s) July 16, 2013–Standard & Poor’s Ratings
Services today assigned its ‘BBB-‘ long-term issue rating and ‘axA’ long-term
ASEAN regional scale rating to the Singapore dollar-denominated Tier-1
perpetual capital securities issued by United Overseas Bank Ltd. (UOB:
AA-/Stable/A-1+; axAAA/axA-1+).
Standard & Poor’s rates the securities three notches below UOB’s stand-alone
credit profile of ‘a-‘. The issue rating reflects:
     — The securities’ risk of subordination;
     — UOB’s full discretion to cancel any periodic dividend payments; and
     — A non-viability clause that requires the bank to permanently write
down the securities, partly or fully, if a loss-absorption event occurs.
To comply with the Monetary Authority of Singapore’s Notice 637 effective Jan.
1, 2013, the Tier-1 securities will incorporate a non-viability loss-absorbing
feature. Under this feature, UOB must write off the securities when: (1) the
regulator informs the bank that it would become non-viable without such
write-off; or (2) the regulator decides to make a public sector injection of
capital without which the bank would become non-viable.

We have assessed the proposed issue as having “intermediate” equity content,
under our ratings criteria. The securities will qualify as additional Tier-1
capital for regulatory capital purposes, and will rank senior to all
shareholders, but junior to all depositors, general creditors, and senior and
subordinated debtholders.” Source : Bloomberg

It looks like the lowest rating amongst the 3 local banks. Correct me if I am wrong.