DBS just priced its third round of covered bonds. Are they a game changer?

SINGAPORE (Jan 18): DBS Group recently announced that it had successfully priced the issue of 750 million euros in fixed rate covered bonds due in 2024 under its US$10 billion ($14.2 billion) Global Covered Bond Programme. The bonds will have a fixed coupon of 0.375% per annum that is payable annually in arrears.

This is the bank’s third issuance of covered bonds, following the US$1 billion issue in 2015 and its A$750 million ($802 million) issue in 2016.

Covered bonds are debt securities that are secured by a pool of mortgage loans which in turn hold the properties as collateral. In Singapore, the bonds have been popular among investors as they are backed by triple-A credit ratings given by the local banks.

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