DBS prices new upper-tier 2 offering

SingaporeÆs largest bank prices upsized dollar-denominated junior subordinated debt offering inside of price guidance.
DBS returned to the upper tier 2 market on Friday (June 9) with a $900 million 15-year non-call 10-year FRN via joint lead managers DBS, Deutsche Bank, JPMorgan, and Morgan Stanley. Morgan Stanley had sole books on the deal.

The Aa3 rated deal priced at par with a coupon of 61bp over 3-month Libor. The coupon steps up to 161bp over if not redeemed on its June 15 2016 call date.

At these levels the deal comes at the wider end of a very small indicative pricing range of 60-61bp over Libor.

The deal was increased from its revised launch size of $750 million. When the roadshows were being conducted DBS was looking at a proposed deal size of $1.5 billion, which would have been well in line with its bank capital strategy. It is not yet clear whether the final size of the offer will mean DBS will return to the market at a later stage.

The final order book closed at $1.1 billion, with 32 investors taking allocations. As is typical with FRN order books, they are characterised by zero-padding, meaning that investors submit orders of what they fully expect to receive in the allocations.

In terms of geography, 40% went to Europe û a region which is a notable FRN buyer û 36% was allocated to US investors and the remaining 24% went to Asian books. By investor type, banks bought 56%, fund managers took 28%, insurers 10% and others 6%.

Following pre-deal roadshows in the US and Europe, DBS opted to go the tier-2 route, after having been largely expected to issue a tier-1 deal. This could be because under new regulations imposed on US insurers tier-1 offerings are now subject to increased capital charges, making them somewhat more difficult to sell.

This has been an interesting deal for AsiaÆs sluggish debt capital markets. Initially, DBS, Deutsche, Morgan Stanley and JPMorgan were mandated to lead the bond, however on Friday it emerged that Morgan Stanley had been awarded sole books.

DBS has consolidated group assets worth S$184 billion ($114 billion).

Correction: In the earlier version of this story it stated that JPMorgan had
left the syndicate. This was untrue. According to Dealogic league tables,
JPMorgan's role is credited as a joint lead manager.

¬ Haymarket Media Limited. All rights reserved.
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