Private banks bite into bonds pie
Straits Times: Mon, Jul 30
PRIVATE banks are starting to feature more strongly in the
demand for recent preference share and bond issuances.
Experts believe that with the prolonged economic
uncertainty, many more investors are turning to bonds or similar investment
instruments to achieve a better yield than bank deposits, and also to escape
the volatility in the stock market.
For instance, just two weeks ago, Mapletree Treasury
Services, which is wholly owned by Temasek Holdings, issued $600 million worth
of perpetual securities, with private banks snapping up 70 per cent of the
issue.
For Olam's $275 million perpetual bond offering, private
banks accounted for close to 80 per cent of the book.
Also, Australian real estate management group Lend Lease saw
43 per cent of its $275 million worth of bonds bought by private banks.
Mr Keith Magnus, chairman and head of UBS Investment
Banking, Singapore and Malaysia, said: 'We are seeing an increasing trend where
issuers of new initial public offerings are looking to increase the amount
placed with cornerstone and anchor investors.
'We have also seen strong demand from wealth management
clients for high-quality debt and equity deals, who are capitalising on the
choppy markets to get solid allocations on deals they like.'
DBS Bank's head of fixed income Clifford Lee noted that
issuers are benefiting from this wave of demand from private banks.
'Having a greater demand from wealth managers and private
banks diversifies the investor base, and can increase the price tension for
bond offerings.'
More than two-fifths of OCBC Bank's latest $1 billion issue
of preference shares and United Overseas Bank's $1.2 billion subordinated debt
were bought by private banks.
Mr Charlie Chan, founder and chief investment officer of
Charlie Chan Capital Partners, is a cornerstone investor of the Ascendas
Hospitality Trust, whose initial public offering closed last week.
He said: 'The number of investors is growing. I think there
could be many more. Singapore has a stable, appreciating currency, which is a
very attractive quality for foreign investors as well, who won't have to worry
about foreign exchange losses.'
As investors put their money in these relatively newfangled
investment structures, corporates too, have reason to cheer as it means another
source of capital.
DBS' Mr Lee added that while in Europe and the United
States, the private bank investors for bonds have been common for a long time,
in Asia, it is just the beginning.
'This interest in bonds is definitely sustainable. It is not
meant to be a replacement for equity or property investments. It is an added
diversification, a much-needed diversification,' he said.
songyuan@sph.com.sg
IT'S JUST THE BEGINNING
This interest in bonds is definitely sustainable. It is not
meant to be a replacement for equity or property investments. It is an added
diversification, a much-needed diversification.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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