Aa2/—/AA- rated DBS opened books for a 144A/Reg S three year at the market open on Thursday. The issuer is looking to sell a fixed and/or a floating rate note, with guidance provided in the 85bp over US Treasuries area or its Libor equivalent.
DBS Bank is the global co-ordinator and also a joint bookrunner alongside Bank of America Merrill Lynch, Citi, HSBC and Wells Fargo Securities.
The Singapore-listed notes, rated the same as the borrower, will be used for the finance and treasury activities of the issuer, including providing intercompany loans or other forms of financing to the DBS Bank Group.
Its debt outing comes a day after ratings agency Moody’s changed the outlook of the Singapore banking system to stable from negative, thanks to improving growth conditions and stabilising commodity prices, which it said will limit a further weakening in asset quality and profitability. It also said it expects the country’s GDP growth to edge up to 2.2% in 2017 and 2.5% in 2018, from 2% last year.
Singapore’s three largest banking groups by assets — DBS, Oversea-Chinese Banking Corp and United Overseas Bank — are closely tied to the government, meaning the country is expected to step in should the lenders require any support.
DBS’s launch followed calls with investors on Wednesday.
HSBC eyes S$ perp AT1
The A1/A/AA- issuer’s transaction is led by sole structurer and sole bookrunner HSBC, alongside joint lead managers DBS Bank and UOB and co-managers ICBC Singapore and Maybank. The JLMs are not involved in the bookbuilding.
As of 11am Hong Kong time on Thursday, books were over S$1bn ($722m).
After a capital adequacy trigger, the notes will be automatically and irrevocable converted into HSBC’s ordinary shares at the conversion price. The capital adequacy trigger will kick in if HSBC’s common equity tier one ratio falls below 7%. Its CET1 ratio at the end of last year stood at 13.6%.
Proceeds from the Reg S outing will go towards general corporate purposes and to further strengthen HSBC’s capital base. The perp is expected to be rated Baa3 by Moody’s and BBB by Fitch.
In mid-May, UK headquartered HSBC hit the dollar AT1 market, bagging $3bn of new capital from a perp non call 10 year.
Chexim chases dollar-euro combo
Joint bookrunners and joint lead managers for its five year fixed rate euro bond — Bank of China, Barclays, BoCom HK, BoCom International, China Construction Bank (Europe), Commerzbank, Crédit Agricole, HSBC and MUFG — opened books at the 75bp over mid-swaps area on Thursday morning. The policy bank is looking for €500m.
At the same time, ANZ, Bank of China, Barclays, BoCom HK, Crédit Agricole, KGI Asia and MUFG threw open books for a three year dollar floater via Chexim’s Paris branch at the 75bp over three month Libor area, with an eye to raise about $300m.
Both the portions are rated A1/AA-/—.