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The ESG Phenomenon - United Overseas Bank

Editorial Staff, 9 April 2021

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Developments and commentary in and around the ESG investment space.

UOB
United Overseas Bank, the Singapore-based lender, said this week that it has priced its first “sustainability bond” offering from Singapore, raising a total of $1.5 billion.

The US dollar-denominated issuance breaks new ground, the Asian firm said. It comprises senior and subordinated debt instruments, and drew “comprehensive” investor take-up across Asia, Europe and the US, the bank said in a statement.

The senior notes and the subordinated notes have been priced at a fixed coupon rate of 1.25 per cent and 2.00 per cent per annum respectively. In aggregate, UOB raised $1.50 billion, with a final order-book of $2.75 billion. Investors who are focused on sustainability issues made up 60 per cent of the final set of orders for the offering.

Loans linked to business areas designed to reduce so-called Greenhouse gases, cut pollution and reduce stress on certain environments form part of a wider drive around “Green” and associated investment ideas. A number of “Green bonds” have been launched and priced in Asia over recent months. Late last year, the Monetary Authority of Singapore launched the Green and Sustainability-Linked Loan Grant Scheme (GSLS), taking effect from January. BNP Paribas, OCBC Bank and UOB introduced innovative green and sustainability-linked loan frameworks that qualify for the scheme.

UOB said the deal is its inaugural issuance under the UOB Sustainable Bond Framework launched in March.

The capital raised will be used to finance or refinance eligible businesses and/or projects in areas such as “Green” buildings and renewable energy, as well as eligible social assets. These include COVID-19-related temporary bridging loans extended to small businesses in Singapore to tide them over during the disruption caused by the pandemic.

The notes’ issue date is expected to be 14 April. The senior notes are expected to receive ratings of “Aa1” from Moody’s Investors Service and “AA-“ from both S&P Global Ratings and Fitch Ratings, while the subordinated notes are expected to be rated “A2” by Moody’s Investors Service, “BBB+” by S&P Global Services and “A” by Fitch Ratings.

UOB’s sustainability bond offering will be issued under its $15 billion Global Medium Term Note (GMTN) Programme. BNP Paribas, HSBC, Societe Generale and UOB are joint lead managers of this transaction, with Bank of China as co-manager.

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