DBS Basel III issue achieves target issue size of S$80m at 4.70%

Investors are lining up.

In a release, DBS Group Holdings Ltd.  today announced that its first Basel III issue – Singapore-dollar denominated non-cumulative non-convertible perpetual capital securities callable in 2019 – has achieved the target issue size of SGD 800 million. 

Strong interest enabled the issue to be priced at an initial distribution rate of 4.70%, the lower end of the tender range.

The Capital Securities together with accrued dividends payable on the SGD 1.7 billion 4.70% non-cumulative non-convertible non-voting class N preference shares issued in 2010 by DBS Bank Ltd., formed the consideration to holders of Existing Preference Shares.

In the tender offer announced on 7 November 2013, the Holders were asked to opt for an initial distribution rate of the Capital Securities at which they were willing to tender their Existing Preference Shares for purchase by DBSH.

This first-of-its kind tender offer was designed to help the DBS Group transition to the new Basel III regulatory capital rules, under which the Existing Preference Shares no longer fully qualify as Tier 1 capital of DBS Bank.

As at the close of the tender offer at 5 p.m., Singapore time, on 21 November 2013, applications amounting to approximately SGD 1.1 billion had been received, exceeding DBSH’s target size of SGD 800 million. DBSH has determined to accept all valid tenders at the initial distribution rate of 4.70% per annum, amounting to SGD 805 million.

The Strike Distribution Rate of the Capital Securities has thus been determined as 4.70% per annum.

Chng Sok Hui, Chief Financial Officer, DBS Group said: “This innovative transaction aimed to achieve several objectives simultaneously. We enhanced the regulatory capital base by replacing non-qualifying preference shares with Basel III-compliant Capital Securities at the same dividend/distribution rate. At the same time, we wanted to give investors in the Existing Preference Shares an opportunity to reinvest in the new Capital Securities.

We are pleased that so many of the investors in these Existing Preference Shares took note of DBS Bank’s continuing right to redeem the Existing Preference Shares and chose to express an interest to remain investors in the DBS Group by responding positively to this innovative tender offer that marks our first Basel III issue.”

DBSH will be sending confirmations to Holders as to whether their Existing Preference Shares have been accepted for purchase. Holders should also check their CDP statement. Beneficial owners whose Existing Preference Shares are held by a Depository Agent should contact their Depository Agent.

The Capital Securities are expected to be issued on 3 December 2013. Moody’s Investors Services (“Moody’s”) has rated the Capital Securities “Baa1(hyb)” and Fitch Ratings Ltd. (“Fitch”) is has rated them “BBB(EXP)”.