Still, given the vast offshore T2 needs of Australia’s big four banks, the Singapore dollar and Dim Sum markets only represent attractive niches. Its greater regional presence also supported demand. ANZ benefited from the extra scarcity value for being the first T2 issuer in the Dim Sum market and in Singapore. The amount raised was only half ANZ’s groundbreaking 4.75% Rmb2.5bn T2 Dim Sum print eight days earlier. On January 29, Westpac privately placed a Rmb1bn (US$159m) 4.85% 10NC5 Dim Sum Tier 2 debut that was subsequently tapped for Rmb250m via two further private deals. OVERSEAS APPEAL Tuesday’s trade was the second time this year Westpac has followed ANZ into a new Tier 2 jurisdiction with a smaller-sized trade. The tight pricing reflects local investors’ assumption of strong government support for the top three Singapore banks, considered too systemically important to be allowed to fail. As an example, United Overseas Bank’s 12-year bond callable in 2020, rated by Moody’s a notch higher than Westpac’s, was quoted at a very tight 3.00% last week. Foreign banks find competitive funding in Singapore thanks to the tight benchmark rates set by the local banks. The bonds were trading around 100.25 the following morning, having been sold at par. Westpac’s first Singapore dollar Tier 2 printed flat or inside its home Tier 2 curve and well within its euro and US dollar curves, underlining Asia’s price advantages over the Northern hemisphere’s two giant T2 arenas. ANZ’s T2 deal is rated A3/BBB+/A+ while Westpac’s is expected to be rated similarly at A3/BBB+ by Moody’s and S&P. Westpac’s 12NC7 deal priced inside initial guidance set at the low 4% area but, even at 4%, the pricing provided a new issue premium over ANZ’s 3.75% T2 deal, which was quoted at 3.66% the previous Tuesday. Bankers report that the recent deals have prompted several enquiries from foreign banks on issuing T2 funds in Singapore, but they caution that only highly rated banks are able to do a deal. In addition, there is a limited supply of subordinated bank paper in the market, making any highly rated T2 paper a much sought-after asset. “There are factors making Singapore attractive as a viable funding centre - banks can achieve decent issue size comparable to the US dollar market, pricing is often competitive and the local market has been largely sheltered from the global volatility,” said one of the leads. It follows in the wake of its Australian peer ANZ, which sold a benchmark S$500m 3.75% 12-year non-call seven Tier 2 issue in March, and French bank BPCE, which issued a S$225m 4.45% Basel III-compliant 10NC5 T2 in June. Westpac is the third foreign bank this year to tap the city-state’s deep appetite for Basel III-compliant bank capital. “This clearly shows that the Singapore dollar market remains open and opportunistic for bank capital product issuances for a select group of high-quality bank issuers,” said Samuel Chan, executive director, bond syndicate at Standard Chartered.
The Australian institution was drawn to the relatively sheltered local currency market, which has repeatedly absorbed bank capital deals from foreign banks in recent months. HONG KONG, Aug 10 (IFR) - Singapore cemented its viability as a funding centre for stringent Basel III-compliant subordinated debt last week after Westpac garnered competitive pricing for a S$325m (US$235.5m) 4% Tier 2 issue amid tough global market conditions. (This story was first published in the August 8 edition of IFR Asia Magazine)
0 kommentar(er)
