UOB’s first Panda bond, or yuan-denominated bond sold in China by a foreign issuer, met strong demand, with the three-year 2 billion yuan (S$404.38 million or US$298.12 million) offering pricing at 3.49 percent, the Singapore bank said on Wednesday.
The bond had a subscription rate of 2.7 times from asset managers and commercial bank investors in the region, with 38 percent of the offering placed with China’s onshore investors and the remainder going to international offshore investors, it said in a filing to SGX before the market open on Wednesday.
Wee Ee Cheong, deputy chairman and CEO at UOB, said the issuance was part of the bank’s support for better financial-market connectivity in the region.
“Our participation in China’s onshore debt market, one of the largest globally, enables us to grow our presence in China as the country continues to liberalize the renminbi and its financial markets,” Wee said in the statement. “Further, 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.”
ASEAN stands for Association of Southeast Asian Nations.
Jacqueline Loh, deputy managing director of the Monetary Authority of Singapore, the city-state’s central bank, expressed approval of UOB’s move to become the first Singapore entity to tap China’s onshore bond market.
“Such cross-border issuances would expand financing channels and strengthen capital markets connectivity between China and Singapore,” she said.
The bond’s proceeds will be used in China to support UOB’s banking business and development there, the filing said.
China Chengxin International Credit Rating rated the bond at AAA with a stable outlook, the filing said.
The bank said it was the first Panda bond from Singapore and only the second from a Southeast Asian financial institution.
Bank of China acted as lead underwriter and lead bookrunner, while China Securities and Standard Chartered Bank (China) acted as joint lead underwriters and joint bookrunners, the filing said.