Oversea-Chinese Banking Corporation OCBC has announced a bond swap, offering to exchange its S$1 billion $645 million of outstanding 5% upper tier-2 bonds due September 2011 for the same principal amount of new 5.6% lower tier-2 notes due 2019. While the exchange won't result in any fresh cash, it will increase the bank's lower tier-2 capital, which ought to be viewed favourably by investors in an environment where there is an increasing focus on capital adequacy ratios.
The new subordinated notes are callable after five years and, if not cancelled, the coupon will step up to 7.35% from 5.6% on the fifth anniversary. They are expected to qualify in full as tier-2 capital for the...
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