Westpac Banking Corp heads to Singapore aiming at cost savings on subordinated bank capital funding. The bank has joined most of foreign banks with US$322m or a 10-year non-call five bond priced at 4.65%. The purpose of this transaction is for the S$600m 4.5% or the 10.25-year non-call 5.25 Tier 2. The sources are from the company’s peers like Australian and New Zealand Banking Group. The deals were against the payment in the US transactions because it achieved substantial cost savings for as much as 20bp in Singapore dollar.
Westpac transaction banker gave remarks about those banks available to achieve huge benchmark deals in both US and Australian markets. They are seeking niche markets for opportunities and Singapore right now is providing this chance. Moreover, other bankers also believe that more Australian banks as well as European banks look for the same fundraising chances in the Singapore dollar market. According to some analysts both Westpac and ANZ benefit from the small supplies in the primary market. This is especially after bank capitals deals from European banks soaked up liquidity. The total of it comprises S$2.6bn of Additional Tier 2 and Tier 1.
Currently, they see some bounce back. Barclays for instance the S$450m of its perpetual non-call five AT1 arrives at quoted bid price of 104.1. The following day, the S$900m in HSBC Holdings’ of 10.25 non-call 5.25 Tier 2 was at 103.6, calculated by IFR Asia. Theoretically, the stronger the prices, it would improve investor demand, especially where the supply is available. Westpac in this case saw a window later and launched the initial price guidance of 4.9%. The firm’s main reference comprises ANZ’s Tier 2.
