NEW UOB SGD TIER 1 : Join The Party
UOB SGD TIER 1
– Benchmark SGD Perp-nc-6 BASEL III-compliant T1 issue with reset at the first call date and every 5-years thereafter
– Initial Price Guidance: 4.90% area
– Size: benchmark
COMPS
Security Bid Px YTC
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TIER 1
UOBSP 4.9 102.00 4.41% (Next call date Jul 2018)
I do not know what to make of this. War cry or act of kindness ?
Act of kindness – to present to the existing holders of DBS 4.7% the option to buy an equivalent paper issued by a bank and not a holding company at a higher yield for 1 year longer in call duration, just in case the holders are prorated on the new issue.
War cry – Yet the timing requires commitment of the bond holders and cash before DBS redemption proper next year. Riding on the heels of perp demand and the FNN holders who will get payment, UOB is luring buyers with a slightly higher coupon to capture a bigger slice of the piece and did I mention that bankers/RMs will get a rebate for selling this bond as opposed to nothing for the DBS issue ?
Seeing secondary market for the UOB 4.9% come off a little this morning to 101 on the offer before rebounding back up to 101.25 level now.
If you held a gun to my head, the old one is better at 4.6% coupon, the 15 month difference is worth at least 0.375% (5Y interest rates at 1.52% and 6Y at 1.82%). But I am talking purely from relative value and value for money perspective. Buyers usually look at the absolute coupon level and the 101 price for the old one may not be available to end buyers after all the commissions thrown in.
Might as well buy the new one because the bankers are paid by UOB directly to sell it and have no incentive to “add on” more commissions.
Having said this, I bet DBS will do nothing about it because the harder their 4.7% sells off, the more panicked the bond holders will be and rush for the tender. Will keep readers updated if DBS 4.7% comes under selling pressure which will be hard because banks have limited lines to buy too much of it anyway thus bankers would “encourage” clients to hold/”discourage” clients from selling.
The old DBS 4.7% perp is worth a buy at 100 or near 100 level because if they do a callback exercise in say 3 months time (using 12 Feb 2014), the yield would still be a nice 3.67%.
Perps scare the shit out of me!
Yes. Bank perps – Basel 3 and bail them all in !!
Actually this bail in ruling should serve to differentiate the good banks from the bad banks but good banks should not use it to their advantage at the expense of their loyal supporters.
Hi tradehaven,
Mind I ask, what is the difference between this new UOB 4.9 Preference share and the previous 4.9 issued few months back? Thank you so much
It is pari passu to the old 4.9% one.
Thanks again Tradehaven,
Any thoughts on the Hiap Hoe 4.75% 3-year re-tap which DBS’s RM’s are touting this morning. It looks the YTM would compare favourably with the YTM’s of similar coupon Aspial and Hong Fok paper?
Cheers.
Hi JC,
I do not have a strong opinion on this name. Have brought up the issue of penny stocks and mid caps issuing to their hearts content. The stock price has certainly done well but it is a fickle market out there.
And of course they would be touting it – good rebates. Ask for bids on the it and it is a different story. And btw, I would not compare it against Aspial – it has been in the business for much longer.
jc888,
For short tenors, I would look at their current debt levels, cash flow generation ability and backers. If you think they will survive a blackswan in the next 3 years and you like the yield, then its a good buy!
Post Lunch Update
Hiap Hoe books > 50 mio. Orignal issue SGD 40 mio.
UOB books > 1 bio. Old UOB 4.9% perp now 101/101.50 level, came off from 102/102.50 before deal announcement.
Hi tradehaven, what is the latest price for old DBS4.7%?
100.30/100.80, i believe.
Books 1.9 bio.
Issue Size 500 mio.
Final coupon 4.75%.
DBS wins.
Hi Tradehaven, mind I Just check with you, is the new UOB perpetual non callable for five or six years? Coz I come across this article in business times saying it is six years. Perhaps there is a misprint there or something I really dun know.
“UNITED Overseas Bank (UOB) is selling perpetual securities non-callable six years indicative coupon 4.9 per cent Monday.
According to a termsheet, the amount is benchmark size, which usually means at least S$500 million.
The subordinated, unsecured, non-cumulative, non-convertible perpetual capital securities qualify as Tier 1 capital for the bank and are Basel 3-compliant.
UOB, Credit Suisse, Nomura, Standard Chartered Bank and UBS are handling the sale.”
http://www.businesstimes.com.sg/breaking-news/singapore/uob-selling-perps-49-indicative-20131111
Sir mind to share your thoughts on what will possibly be the debut price given the fact that the coupon is lower than the other?
Thank you so much again for everything.
Yes. If you read my post, I put the details there i.e. the NC6 and mentioned that the 5-6Y, roughly 15 months differential between the 2 UOB’s should be worth at least 0.375%.
As the coupon fixed much lower than expected at 4.75%, I do not expect the bond to rally even though it was 4 times oversubscribed with final books closer to 2 bio SGD.
And like the previous UOB, we are likely to see its price stagnate around 100. The older 4.9% UOB perp should find some demand because its yield should theoretically be 4.4% or thereabouts. Still, that is a lot of UOB paper in the marketplace, so if I were you I would not hold my hopes up for a massive windfall.
Thank you so much for your kind explanation. I am sorry for missing out the obvious details you have spend much effort to systematically placed there. My sincere apologies. Will look out for any price updates if you happen to post it here later. Thank you so much.
The Monetary Authority of Singapore has approached bankers and investors to gather information on a consent solicitation that F&N launched last week.
I pasted the link in the forum under SGD Corporate Bonds.
Moody’s assigns Baa1 (hyb) to Singapore UOB’s non-viability perpetual capital securities
That description gives me the creeps and that is what you are buying btw.
Capital securities that can invoke writedown at PONV (POINT OF NON VIABILITY)
Private Banks Buy 68% of UOB’s Singapore Dollar Perpetual Bonds
Nov. 12 (Bloomberg) — According to a person familiar with the matter.
Insurance companies acquire 21% of the notes, followed by agencies with 8%
Onshore investors account for 99% of the sales
Total orderbook of S$1.85b from 71 accounts
UOB 4.75% 100.80/100.85
UOB 4.9% 102/102.50
I booked 2 lots and got none, why so hard to buy?
UOB AND DBS BOND UPDATE
New UOB 4.75% last done 101.00
UOB 4.9% 102.25/103
DBS coming off still with the call risk on it. 100/100.75
Hi tradehaven, do you have today’s prices for UOB 4.75, UOB 4.9 and DBS 4.7?
UOB 4.75% 101/101.25
UOB 4.9% 102.25/102.75
DBS 4.7% 100.17/100.87
Comment from UBS this morning to pb clients :
”
DBS Group Holdings has announced an exchange offer for DBS Bank’s existing 4.7% Tier 1 securities callable in 2020.
The new bonds will be issued by DBS Group, will be Basel III compliant, and may yield between 4.7% and 4.9%, with a “point of non-viability” loss-absorption language**.
Taking into account the structural subordination of the new bonds, the existing DBS Bank bonds, and peer banks’ Basel III-compliant securities, we do not see value in an exchange below 4.8%.”
BARCLAYS PerpNC5 AT1 Contingent Capital NEW ISSUE TODAY AT LOW 8% !!! Now we are talking.
Thanks again Tradehaven,
I’ve gone in with an application for the Barclays Perp. Don’t know if I’ll get any. For the avoidance of doubt it is US$ denominated ……….. and I was advised by my RM that a) this is a huge issue – the books are in the US$ billions and b) the dividend payments are quarterly.
I’m not so sure about KSH – will be interesting to know how DBS (sole lead I understand) managed to run up.
Looks like the market prefers the old one. The 2023 sub is seeing good demand at 6%.
You are buying a AT1 Coco which is one of the rare firsts. We have seen Coco subs but not many Coco perps and it has a high trigger of 7% (same as the sub but not the same before 2019) – don’t you love the lingo ?
Maybe we should write a piece on decrypting the jargon.
Good luck !
KSH managed 75 mio with no sweat. PB heaven.
Latest bid price I have seen for the DBS 4.7%’s is S$ 100.27 – offer prices are a smidgen under S$ 101.
I would love to see UOB’s in depth analysis of their “4.8%” in respect of the coupon of the new DBS paper, i.e. the 4.8% in QUOTE …….. we do not see value in an exchange below 4.8%.”UNQUOTE
By the way ………… I have not received any paper-work in the mail from DBS yet. And for that matter……………….. I have not even received an e-mail notification. Tsk! Tsk!
New UOB 4.75% at 101.50/101.60 (4.51/4.48%) at close.
I don’t know what to say.
Do you expect it to go up and up or near/below IPO price in the short term and why?
My broker quoted offer price 102.4 already
DBS 4.7% 100.28/100.88
UOB 4.75% 101.35/101.70
UOB 4.90% 102.20/102.70
Do not expect a windfall.
tradehaven, you have the latest for UOB 4.7%?
Fitch Rates UOB’s Basel III Tier 1 Securities Final ‘BBB’
I am seeing 101.25/101.55 for the UOB 4.75% perpetual. Good luck !