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DBS raises S$685m through first green bond by a local financial institution

SINGAPORE—DBS Group Holdings has launched Singapore’s first green bond by a financial institution.

SINGAPORE—DBS Group Holdings has launched Singapore’s first green bond by a financial institution.

The US$500 million (S$685 million) floating rate green bonds will be issued with a five-year maturity, to yield a quarterly coupon of three-month US dollar Libor (London Interbank Offered Rate) plus 62 basis points.

DBS said the issue of the bonds was well-received in the market, allowing the “tight pricing” for a five-year benchmark deal, due to the issuer’s strong credit rating and rare issuance in the US dollar bond market.

“The launch of our green bond amplifies our commitment to sustainability and to supporting projects which have a positive impact. It adds another dimension to efforts to ‘green’ our operations, and lends support to the transition to a low-carbon economy,” said DBS chief financial officer Chng Sok Hui.

The bonds were placed with investors in Asia (37 per cent), the United States (41 per cent) and Europe (22 per cent), with institutional investors, fund managers, asset managers and banks showing strong appetite, said the bank.

The net proceeds from the issue of the bonds will be used for the finance and treasury activities of DBS group, including the provision of intercompany loans or other forms of financing to DBS Bank and its subsidiaries.

The first green assets are expected to include the banking group’s financing of Marina Bay Financial Centre Tower 3, which was certified Green Mark Platinum — a building rating system to assess environmental impact — by the Building and Construction Authority of Singapore.

Green bonds are fixed-income securities that raise capital for use in projects or activities with environmental benefits, such as those to cut greenhouse gas emissions.

In March, Second Minister for Finance Lawrence Wong announced the Green Bond Grant scheme by the Monetary Authority of Singapore to kick-start the development of a green bond market in Singapore.

Under the scheme, qualifying issuances can offset 100 per cent of expenses attributable to obtaining an external review for green bonds, up to a cap of S$100,000 per issuance.

The bonds can be denominated in any currency but have to be issued and listed in Singapore, with a minimum size of S$200 million and tenure of at least three years.

Property developer City Developments (CDL) in April became the first Singapore company to issue a green bond. The two-year secured bond raised S$100 million at a 1.98 per cent fixed rate due 2019.

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