Trade of Asia

Asian Banks Secure $4.75 Billion from US Dollar Bond Markets

SYDNEY (Reuters) – Major Asia Pacific financial institutions, spearheaded by Commonwealth Bank and DBS Group, have actively ventured into U.S dollar bond markets, amassing $4.75 billion through distinct deals, as evidenced by term sheets acquired by Reuters.

Commonwealth Bank (CBA), standing as Australia’s premier bank in terms of market capitalization, garnered $3.25 billion via three separate bond issuances. This includes $1.75 billion from a five-year covered bond, $900 million via a two-year fixed rate note, and $600 million from a two-year floating rate note, detailed a term sheet. However, CBA refrained from commenting on this financial move.

DBS Group, the leading bank in Singapore, marked its re-entry into the dollar bond markets after a hiatus of almost two years, raising a substantial $1.5 billion.

This surge in bond activity was evident on a particular Tuesday in the U.S. where the market witnessed 21 bond issuances accumulating to $31 billion, as reported by IFR.

A post-Labor Day surge in bond releases in the U.S. by eminent global investment-grade-rated firms has exerted additional strain on extended U.S. Treasuries. This is attributed to a shift in investor preference towards top-tier corporate debts, which promise superior returns compared to government bonds.

Southeast Asia’s predominant lender, DBS, introduced a two-year fixed rate bond amassing $750 million, alongside a two-year floating rate note of the same value, as indicated by the term sheet.

The fixed rate note’s coupon was pegged at 5.479%, whereas the floating rate note was benchmarked against the Secured Overnight Financing Rate (SOFR), with an added 61 basis points.

The two-year fixed rate bond witnessed subscriptions surpassing $2.65 billion, as per the term sheet. Concurrently, the floating rate note captivated investors, amassing over $2 billion in orders.

Reflecting on the overwhelming response, Chng Sok Hui, the Chief Financial Officer at DBS Bank, remarked, “The robust order book momentum, being thrice oversubscribed, mirrors the market’s staunch faith in DBS.”

In terms of acquisition, U.S. and Asia-centric investors clinched nearly 90% of the fixed bond, while a staggering 98% opted for the floating note, the term sheet outlined.

The funds accrued from these bonds by DBS are earmarked for bolstering its financial and treasury pursuits.

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