Leading the way
OCBC Bank stood out in an unpredictable year for the Singapore bond market, adapting quickly to changing market conditions and winning more than its fair share of sole mandates from high-quality issuers.
After a difficult end to 2018, OCBC was quick to spot the return of demand for fixed income as investors switched out of volatile equity markets in search of more stable returns.
Having identified early in the year that investor demand favoured both high-grade credits and higher yields, it originated deals that went down the duration curve.
As sole bookrunner, it lured private banks back to the perpetual market with an investor-friendly structure from Frasers Property that had a call, a reset and a step-up at the end of year five. The S$400m (US$293m) 4.98% deal – at the time the largest perpetual bond outside the banking sector for two years – drew a book of over S$900m with private banks taking 90% of the deal.
OCBC handled more corporate perpetuals than any other bank, including a sub-4% print for Ascott Residence Trust.
“We led the way in thought leadership with both issuers and investors, getting institutional investors comfortable in the longer end of the curve, and convincing private bank investors to rotate back into Singapore dollar fixed income products,” said Tan Kee Phong, OCBC’s head of capital markets.
Singapore’s second-biggest bank kept its finger on the pulse of the bond market and made the right calls on which segment of the investor base to target, earning several high-profile deals as a result.
Wins included a coveted sole mandate for a S$500m dual-trancher from state-owned Keppel, a high-quality credit that had been absent from the bond markets since 2015.
The success of that deal convinced Keppel to entrust OCBC with another sole role on a S$200m 3% seven-year issue in September, while subsidiary Keppel Infrastructure Trust mandated OCBC in June as sole lead for a S$200m 4.75% perpetual with an unusually long 10-year first call date, and again for a S$100m tap two weeks later.
“We were way ahead of other banks in recognising market changes and we were among the first few to show new ideas to clients such as Keppel,” said Pee Beng Kiong, OCBC’s head of bond syndicate.
OCBC also helped Credit Suisse and Standard Chartered raise Additional Tier 1 capital in Singapore dollars, delivering a strong pricing arbitrage and new investors for the two issuers.
The bank capital offerings also satisfied investor demand for higher yields from high-quality issuers, underlining OCBC’s read of the local buyer base.