SINGAPORE: Oversea-Chinese Banking Corporation, OCBC, prices S$450 million perpetual capital securities under its global medium-term note programme, which has a total value of S$39.95 billion (US$30 billion), The Edge Singapore reports.
The notes come with a coupon rate of 4.05% per annum (p.a.) and are subject to redemption conditions. The first callable date is set for 2029, with the option for redemption on Oct 16, 2029, or any distribution payment date post the first reset date.
Conditions for redemption include a tax event or the capital securities no longer qualifying as eligible capital.
In the event the securities are not redeemed on the first reset date, the distribution rate will be reset every five years thereafter. The reset rate will be a fixed per annum, comprising the aggregate of the prevailing five-year Singapore Overnight Rate Average overnight indexed swap (SORA-OIS) and the initial spread of 1.3165%.
Distributions may be cancelled at the bank’s discretion, adhering to the provisions outlined in the securities.
The objective of these securities is to serve as additional tier 1 (AT1) capital in compliance with the Monetary Authority of Singapore’s (MAS) requirements.
According to Basel III regulations, if OCBC is deemed non-viable by MAS, the securities may be wholly or partially written off.
Proceeds from this issuance, totalling S$450 million, are for general corporate purposes.
OCBC is acting as the sole lead manager and bookrunner for this offering. The notes are to be issued on Jan 16, 2024.
The Edge Singapore states, “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.”
OCBC shares are at S$12.83 as of 5:04 p.m. SGT./TISG