UOB Sets A New Milestone In The Panda Bond Market With RMB 5 Billion Issuance

In a significant financial achievement, United Overseas Bank (UOB) has successfully priced a RMB 5.0 billion three-year Panda bond at an attractive coupon rate of 2.3%. This issuance marks UOB’s return to the Panda bond market, having last issued one in 2019. The offering has garnered robust demand, showcasing the bank’s commitment to capital markets in Mainland China while also highlighting the ongoing growth of the Panda bond market.

The bond issuance attracted a remarkable subscription ratio of 1.73 times, reflecting strong interest from both onshore and offshore investors. Notably, new investors accounted for over 20% of the allocations, underscoring UOB’s appeal among a diverse investor base. With this transaction, UOB has set the record for the largest issue size for a three-year tenor among foreign financial issuers.

Koh Chin Chin, Head of Group Treasury, Research and Customer Advocacy at UOB, expressed enthusiasm about participating in the burgeoning Panda bond market. “We have always been excited to participate in the growth of the Panda bond market. We were the first Singaporean Panda issuer in 2019, and riding on the back of the rapidly-growing capacity of this market, our latest issuance is also the largest from a foreign financial issuer with a three-year tenor,” he stated.

A Commitment to Renminbi Internationalization

UOB’s successful issuance highlights its long-standing commitment to the capital markets in Mainland China. As the first Singaporean issuer and the only Singaporean bank in the Panda bond market, UOB’s efforts align with the Chinese government’s ongoing push for Renminbi internationalization. This bond issuance is UOB’s fifth Chinese interbank bond offering, further solidifying its presence in this vital financial arena.

The transaction also comes at a time when the Panda bond market is gradually reopening to global financial institutions, just weeks after market fluctuations tied to risk sentiment changes in China following the Golden Week holidays. This re-entry demonstrates UOB’s robust access and unique credit proposition to both offshore and onshore investors.

Distribution Statistics and Market Impact

The bond’s distribution statistics reveal that onshore investors in China accounted for 64% of the allocations, while offshore investors comprised the remaining 36%. In terms of investor types, banks led the way with 80% of the allocations, followed by securities firms at 12% and wealth management companies and funds at 8%.

UOB’s successful issuance was supported by prominent financial institutions, with Bank of China serving as the Lead Underwriter and Lead Bookrunner. Additional support came from China Construction Bank, China Securities, CITIC Securities, Deutsche Bank (China), and others acting as Joint Lead Underwriters and Joint Bookrunners.

UOB’s strong market positioning is further evidenced by its proactive approach. Earlier in mid-2024, the bank conducted a non-deal marketing exercise across four cities in five days, engaging key investors in Beijing, Shanghai, Shenzhen, and Hong Kong SAR. This outreach played a pivotal role in generating interest for the bond issuance.

Future Prospects

Looking ahead, UOB plans to apply for the bond to be listed on the Singapore Exchange (SGX), subject to regulatory approval. This listing would mark a first for any financial institution wishing to list a Panda bond on SGX, adding another feather in UOB’s cap as it continues to pave the way in the evolving bond market landscape.

As UOB steps boldly back into the Panda bond arena, the bank not only reaffirms its position as a key player in the financial markets but also contributes significantly to the broader narrative of Renminbi internationalization. This strategic move will likely enhance UOB’s visibility and reputation in both the onshore and offshore investment communities, signaling a bright future for the bank and its stakeholders.

(with ANI Inputs)

ALSO READ: Paytm Reports Rs 930 Cr Profit After Exceptional Gain, Revenue Surges