– New 10.5NC5.5 SGD T2 announced at the back strong reverse/IOI
– Expected issue ratings: Baa3/BBB/A- (M/S/F)
– Price guidance @ 4.50% area
– Size: TBD
– Attractive pick-up over SGD T2 comps and BPCE outstanding T2 paper
– PB Rebate: 25bps (applicable to Asian PBs only)
– Timing: Today’s Business


USD Seniors: BPCE trades flat to ANZ and 20bps inside of STAN LN
BPCEGP 2 ¼ 01/27/20 T+ 71, G+82
ANZ 2 ¼ 06/13/19 T+52, G+82
STANLN 2 ¼ 04/17/20 T+101, G+105

SGD Tier 2: At guidance, ~90bps pickup over comps after curve adjustment
ANZ 3 ¾ 03/23/27 (A3/BBB+/A+) 3.65% yield to 2022 call
STANLN 4.4 01/23/26 (A2/BBB) 3.73% yield to 2021 call

BPCE Tier 2:
CNH: BPCEGP 5 ¾ 03/26/25 101.50 5.38% -> swaps to 4.21% in SGD

BPCE SA, France’s second largest bank, provides a full range of commercial banking services for individual customers, corporates, institutions, and local authorities. The Bank offers personal banking, insurance, loans, real estate financing, asset management, private equity, investment solutions, and specialized financial services. BPCE SA operates a network of branches in France.

BPCE is a cooperative banking institution ! with 8.9 million co-op shareholders. Move over, NTUC ! And is also in the G-SIB – Global Systemically Important Bank – list.

Today’s 5.5 year swap rate is about 2.40% which gives us a 2.1% pick up for this bond. 5 year SGS is yielding about 1.95%.

The advantages :

1. 5 year SGD interest rates are at their 5 year highs.

2. Credit spreads are not quite near their lows today at 1.66%.

iTraxx Europe Sub Fin 5Y index

iTraxx Europe Sub Fin 5Y index


Besides there is not a lot of Tier 2 bonds in SGD to choose from, if you are looking for some, even if you are happy with the Total Loss Absorption Capacity clause that applies under Basel 3.

The withholding tax issue is also addressed.

” All payments of principal and interest by the Issuer hereunder shall be made free and clear of and without withholding or deduction for any and all present or future taxes, levies, imposts or charges (all such taxes, levies, imposts and charges being hereinafter referred to as “Taxes”), except as required by law.”

LAW is the key here.

“Pursuant to Article 125 A III of the French Code général des impôts, payments of interest and other revenues made by the Issuer with respect to the Notes are not subject to the withholding tax unless such payments are made outside France in a non-cooperative State or territory. in which case, a 75 per cent. withholding tax is applicable. The 75 per cent. withholding tax is applicable irrespective of the tax residence of the holder of the Notes.”

I would like to point out they missed out the most glaring comparable in SGD space – UNICREDIT 5.5% 07/2023 callable in 07/2018, an old style Tier 2 (presumably no loss sharing). Italy’s largest bank by assets, and also on the G-SIB list.

Indic Price 95.25/96.50 ( 7.23/6.76%)

No need to thank me  for those who had spoken to me in the past.

Back to BPCE, 5.5 years 4.5%, what can we say ?

Not bad for the SGD 150 mio that I am hearing will be printed. Makes me wonder why they picked SGD but for the strong reverse enquiry, I suppose. The coupon seems fair given that they are pay only about 3% for their 10 year EUR sub.

The timing is also right to pick on the SGD, with 5 year rates at 5 year highs.

Good luck.