Oversea-Chinese Banking Corporation (OCBC) has priced $450 million worth of perpetual capital securities under its US$30 billion ($39.95 billion) global medium term note programme.
The notes carry a coupon of 4.05% per annum (p.a.) and will be first callable in 2029. They may be redeemed on Oct 16, 2029, or any distribution payment date after the first reset date, upon the occurrence of a tax event or if the capital securities no longer qualify as eligible capital. If the securities are not redeemed on the first reset date, the distribution rate will be reset then and every five years thereafter to a fixed rate per annum equal to the aggregate of the then-prevailing five-year Singapore Overnight Rate Average overnight indexed swap (SORA-OIS) and the initial spread of 1.3165%. Distributions may be cancelled by the bank at its sole discretion, subject to the provisions of the securities.
The securities are intended to qualify as additional tier 1 (AT1) capital of the bank under the Monetary Authority of Singapore’s (MAS) requirements. As a Basel III capital instrument, if the bank is determined by the MAS to be non-viable, the securities will be written off in whole or in part.
The net proceeds from the issue of the securities will be used for general corporate purposes.
OCBC is the sole lead manager and bookrunner for this issue. The notes are expected to be rated Baa1 by Moody’s Investors Service, BBB- by Standard & Poor’s Rating Services and BBB+ by Fitch Ratings. They will be issued on Jan 16.
As at 9.56am, shares in OCBC are trading 8 cents lower or 0.62% down at $12.80.
