OCBC Bank is offering S$1 billion worth of preference shares that will pay a fixed annual dividend of 5.1 percent.

The move is a bid by the lender to strengthen its Tier 1 capital base.

The bank says up to 9.5 million shares at S$100 each will be allocated to institutional and retail investors.

Another 500,000 shares, also at $100 each, will be sold to retail investors through the automated teller machine network of OCBC and DBS.

The dividend is paid twice a year in June and December.

The minimum subscription is 200 preference shares or S$20,000, and thereafter in multiples of 100 preference shares or S$10,000.

OCBC says the preference shares are perpetual securities with no fixed redemption date.

They can be redeemed at the option of the lender five years from the date of issue and on each dividend date thereafter, subject to approval from the Monetary Authority of Singapore.

According to OCBC, the net proceeds from the issue will be used for general corporate funding purposes.

The preferences shares have been rated Aa3 by ratings agency Moody’s. Fitch has given an A+plus rating, while Standard and Poor’s has assigned an A-minus.

The offer closes on July 28 and the preference shares are expected to be listed on the Singapore Exchange from July 30.

Two weeks ago, DBS Bank raised S$1.5 billion from the sale of preference shares. However, that offer was made only to institutional investors.


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  • OCBC is seeing strong demand for its preference shares. OCBC said in a statement that the placement tranche has been more than three times oversubscribed.

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