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Sunday, 22 April 2018

Singapore Bond House

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In a year when a flight to safety gripped the Singapore dollar bond market, OCBC Bank gained market share against the odds, adapting its strategy to changing market conditions and winning the confidence of investors and issuers.

Having put together a nine-strong team to expand in the debt capital markets, OCBC decided early to focus on investment-grade deals. That proved a sound move, given the pervading risk-off sentiment, and OCBC won a string of sizable mandates for high-quality issuers, a number on a sole basis.

OCBC soared up the league table during the year under review to see its market share improve a staggering 19 percentage points. It chalked up S$5.8bn (US$4.1bn) of league table credit during IFR’s review period, a 27.6% share of the market, up from just S$1.8bn and 8.3% a year earlier.

A year ago, OCBC could not make a dent in the top three positions of the Singapore dollar bond league table. Just 12 months on, it has ousted HSBC and Standard Chartered to become the city’s number two bookrunner in terms of volumes, vindicating its expansion strategy and showing the strength of its 2014 hires.

OCBC has built a reputation for bringing quality names and solid structures to market, as well as providing secondary-market support. One of its many buyside fans declared that any OCBC structure would be regarded as a sterling credit proposition and needed little close examination.

The bank also tweaked its execution strategy to cope with the volatility in rates. When market conditions warranted, OCBC strayed from the typical full-day approach to the bookbuilding process to approach a smaller group of investors and price the deal in the morning before offering it to the wider market in the afternoon.

Singtel Group Treasury’s S$150m 6.5-year 2.72% issue – the first from the marquee issuer in four years – was tied up in this fashion, minimising rate risk for the issuer. The February trade subsequently led to two other deals for the Singtel group – a S$150m 5.5-year 2.58% issue in March and a S$150m seven-year 3.24% offering for Optus Finance in September. Notably, OCBC did all three issues on a sole basis.

OCBC also picked up on rising demand for longer-dated assets among yield-hungry investors, and matched that with clients looking to lock in long-term funding. It helped Land Transport Authority seal a 15-year issue of S$650m at 3.51%, the longest-dated senior bond sold in Singapore during the year under review. The bank was also a bookrunner on all five Singapore dollar perpetual notes sold in this period, including Frasers Centrepoint’s S$700m 5% non-call five in March, Sembcorp Industries’ S$600m 4.75% non-call five in May and OCBC’s own S$500m 3.80% Additional Tier 1 in August.

To see the digital version of this report, please click here.

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