The Aa3/A/A+ (Fitch) rated notes were priced at par with a coupon of 4.47%, with a step-up in 2016. If not called the notes step up to six-month Singapore dollar swap offer rate plus 158bp.
The deal was sold primarily to domestic investors, consisting of asset managers, insurers and banks.
Proceeds from the sale of the bonds will be used to refinance existing amortising tier 2 capital. It will rank pari passu with all existing and future subordinated issues, including last monthÆs dollar-denominated offering.
ôFollowing our earlier $900 million subordinated notes offering on June 9, we continued to receive strong reverse enquiries from investors attracted to DBS as a highly rated Asian bank but who wanted a Singapore dollar issue,ö says Jeanette Wong, CFO of DBS Bank. ôThis Singapore dollar subordinated notes offering allows us to tap market demand to supplement our dollar transaction.ö
Historically, like all Singapore-based banks, DBS tends to be very highly capitalised. As of the end of last year, DBS had a total capital adequacy ratio (CAR) of 14.8% and a tier-1 ratio of 10.6%, respectively.
This new deal will temporarily improve those already strong positions; however with DBS pursuing a regional expansion strategy those ratios are expected to decline. Despite this, DBS is likely to stick to its standard of keeping a CAR at a relative premium over the minimum regulatory requirement.
The three bookrunners on this deal were also joint leads on the previous dollar deal. That deal's bookrunner Morgan Stanley was not a bookrunner on this deal - but it was a joint lead manager.
That previous deal became a key talking point among the region's respective syndicate desks. That's because it saw DBS elevate Morgan Stanley to sole bookrunner at the eleventh hour - to the disappointment of Deutsche Bank, JPMorgan and DBS's own investment banking arm.
Their more senior role on this recent deal will go some way to assuage that disappointment.
¬ Haymarket Media Limited. All rights reserved.
