KUALA LUMPUR, June 17 — DBS Group Holdings Ltd. is planning to sell Singapore’s first covered bond as lenders in Asia seek to lift the quality of their assets amid tighter rules.
The city-state’s largest bank will meet investors in Asia, Europe and the US from June 22 to discuss a euro- or dollar-denominated bond offering, according to a person familiar with the matter. An issue would mark the start of a potential US$10 billion (RM37.39 billion) sale programme, the person said.
DBS joins lenders in Malaysia and Korea selling covered bonds as Basel III rules that require banks to hold more liquid, high quality debt are enforced. Covered bonds typically get the highest grades from rating companies as they’re backed by performing mortgages and other investments perceived as safe.
“The amount of ultra-high quality paper has diminished significantly post the global financial crisis,” said Swee Ching Lim, a Singapore-based credit analyst at Western Asset Management Co. “The world is starved of triple-A debt.”
Singapore released guidelines in December 2013 allowing covered bond sales by banks capped at an amount equivalent to 4 per cent of their total assets.
South Korea’s Kookmin Bank is marketing the nation’s first covered bond since new laws on the products took effect last year. In Malaysia, issuers including the Malaysia Building Society Bhd. have sold the notes. —Bloomberg
