UOB Prices €1 Billion Euro Covered Bond, First From Asia
Singapore's UOB completed a landmark €1 billion euro-denominated covered bond offering, becoming the first Asian issuer to do so. Strong investor demand allowed the bank to achieve tighter pricing for both two-year and five-year tranches.
UOB Completes Landmark Offering
UOB has priced a €1 billion (US$1.2 billion) dual-tranche covered bond transaction. This marks the first such offering by an Asian issuer, the bank stated on Thursday (August 27). The bonds, with two-year and five-year tenors, were issued under UOB's US$15 billion Global Covered Bond Programme.
This transaction also represents the first two-year euro covered bond issuance from an Asia-Pacific issuer since 2023, demonstrating UOB's strategy to optimise maturity management and capture broad investor interest.
Strong Demand Tightens Pricing
The offering generated "exceptionally strong" investor demand, UOB reported. Peak combined order books surpassed €4.25 billion within four hours of launch. The final book closed at approximately €3.9 billion, representing an oversubscription of about four times. This robust interest allowed UOB to tighten pricing from initial guidance.
The two-year tranche repriced by eight basis points (bps), and the five-year tranche by six bps, enabling the bank to secure "historically tight funding spreads."
Dual-Tranche Details
The issuance was split equally, with €500 million for each maturity. The two-year tranche, maturing on September 8, 2028, carries a fixed annual coupon of 3.118 per cent. It priced at mid-swaps plus seven bps, approximately five bps inside comparable Singapore secondary market levels.
The longer-dated five-year tranche, maturing on September 8, 2031, features a fixed annual coupon of 3.342 per cent and priced at mid-swaps plus 24 bps. Both tranches are expected to receive Aaa ratings from Moody's Investors Service and AAA from Standard & Poor's Rating Services.
UOB's dual-tenor strategy successfully attracted a diverse investor base. Bank treasuries accounted for 56 per cent of the two-year order book, while asset managers secured 41 per cent of the five-year tranche. This transaction reveals Asian financial institutions can access the euro covered bond market for efficient, diversified funding.
It provides a viable template for other regional lenders seeking to optimise their capital structures and broaden their funding sources beyond traditional domestic markets.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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