UOB prices S$750 million perpetual securities

UOB branch at Tiong Bahru PlazaUOB branch at Tiong Bahru Plaza

UOB priced S$750 million in 3.58 percent perpetual securities, which will be issued under its US$15 billion global medium-term note program, the bank said in a filing to SGX Thursday.

The securities will be first callable on 17 July 2026, which is also the first reset date for the interest rate, the filing said, noting subsequent reset dates will be every seven years afterward.

The rate will reset to the then-prevailing seven-year Singapore dollar swap offer rate plus an initial spread of 1.795 percentage points, UOB said.

The securities are expected to be rated Baa1 by Moody’s Investors Service, BBB-minus by Standard & Poor’s Rating Services and BBB by Fitch Ratings, UOB said.

The Baa1 rating from Moody’s indicates securities are medium-grade and have moderate credit risk, with some speculative characteristics, but still rank at the higher end of the category.

S&P’s rating system defines the BBB-minus rating as indicating “adequate protection parameters,” but that adverse economic conditions or other changes are more likely to weaken the ability to meet the securities’ obligations. The minus indicates the rating could be lowered.

Fitch’s BBB indicates good credit quality with a low default risk, but that adverse business or economic conditions are more likely to impair the ability to meet financial commitments.

The securities can be written down permanently and distributions can be cancelled if there is a “loss absorption event,” which can include the Monetary Authority of Singapore notifying UOB it believes the write down is necessary, or if there is a public sector injection of capital or similar events, UOB said.

UOB said the perpetual securities are intended to be additional tier 1 regulatory capital.

United Overseas Bank is the sole global coordinator for the perpetual securities, and will act as joint lead manager along with ANZ, Standard Chartered Bank (Singapore), HSBC’s Singapore branch and UBS’ Singapore branch, the filing said.

The issue date is expected to be 17 July, UOB said.

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