UOB Pilots a Digital Bond Issuance on Marketnode’s Digital Asset Issuance Platform
UOB is the first financial institution issuer in Singapore to tap Marketnode’s digital asset issuance, depository and servicing platform. The Bank is piloting the digital issuance of its latest bond offering in its focus on supporting open digital solutions and ecosystems that help develop
Singapore’s capital markets infrastructure and the financial sector.
Marketnode, a joint venture between Singapore Exchange and Temasek, is an exchange-led digital asset venture focused on capital markets workflows through smart contracts, ledger, and tokenization technologies. The platform leverages distributed ledger technology to connect various parties involved in the transaction – from issuers to investors – and to tokenize the capital security, so that smart contracts can be created and conducted for greater efficiency.
The digital bond is run in parallel with the conventional issuance process. UOB’s latest perpetual, non-call seven-year additional Tier 1 (AT1) capital securities offering is the industry’s first public capital issuance to reference the Singapore Overnight Rate Average Overnight Indexed Swap (SORA-OIS) rate. The transaction reinforces the industry’s adoption of a SORA-based pricing benchmark in the Singapore dollar bond market.
Mr. Wee Ee Cheong, Deputy Chairman and Chief Executive Officer, UOB, said, “UOB is fully behind the development of Singapore’s digital capital markets infrastructure and the smooth transition to a SORA-centred financial market. We are pleased to be the first financial institution to support Marketnode’s exchange-led network in our dual role as a major Singapore dollar bond issuer and bond house. As more global issuers and investors come on board and participate in Singapore’s digital capital markets, we will see further strengthening of Singapore’s status as the region’s financial hub.
The Bank’s AT1 securities have been priced at a fixed coupon rate of 2.55 percent, the lowest for a benchmark perpetual securities for banks in Singapore. UOB raised a total of S$600 million, with a final orderbook of more than S$1 billion from a total of 73 accounts. Testament to UOB’s strong credit standing, the transaction saw a subscription rate of 1.7 times, supported by an extensive investor base comprising both quality institutional accounts and private banking investors. Ninety-two percent of them were based in Singapore while eight percent were international offshore investors.
The perpetual capital securities are expected to be rated Baa1, BBB- and BBB+ by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings respectively.
UOB is the Sole Global Coordinator and, together with Credit Suisse (Singapore) Limited, The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch and Standard Chartered Bank (Singapore) Limited, the Joint Lead Managers and Joint Bookrunner.
Photo by Aditya Chinchure on Unsplash
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