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News on Covered Bonds:Singapore’s maiden Covered Bonds!


Singapore’s maiden Covered Bonds!

July 30, 2015

DBS has given Singapore its maiden covered bonds issuance under its USD 10 billion global covered bonds program. DBS bank has issued covered bonds of USD 1 billion and the bonds are due by 2018. Bonds have a fixed coupon of 1.625% semi-annually in arear. The covered bonds issuance has received strong interest from global investors, from about 16 countries, with 51% of the investment orders from Asia. Under this program, DBS can periodically issue upto USD 10 billion of bonds. These bonds are secured by a dynamic pool of Singapore residential mortgage loans. The cover pool consists of prime mortgages and has an overcollateralization of 17%. The portfolio has a weighted average loan to value ratio of 58.4% and is 47 months seasoned. The cover pool comprises loans secured by condominiums, detached houses and other landed properties, terrace houses and apartments. The issuance is expected to receive an AAA rating from Fitch and Aaa from Moody’s. Covered bonds are rated higher than senior unsecured debt as investors have recourse to both the issuer and a portfolio of receivables.DBS was also granted the ECBC Covered Bond Label on 29 June, 2015 . This quality label was the first granted by The Covered Bond Label Foundation to an issuer a Non-European Economic Area . The programme has received approval in-principle from the Singapore Exchange Securities Trading Limited (SGX-ST). DBS is the first issuer of Covered Bonds in Singapore post finalisation of the covered bonds regulations in the country . It is also the first South-Est Asian country to sell covered bonds in the off shore market. With the maiden issue on the counter, the covered bonds market is expected to grow rapidly in the region.

Nidhi Bothra

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