Can UOB shares break through S$30 this year?

• United Overseas Bank Ltd (SGX: U11) share price dipped to S$26.35 on Tuesday (28 June 2022)
• The large cap company has priced S$400 million worth of perpetual capital securities at 4.25% per annum
• Analysts foresee a 30% upside on the stock in the next 12 months
• Keen to trade UOB shares? Open an account with us to start today

UOB stock price: what’s the latest?

United Overseas Bank (UOB) shares fell slightly on Tuesday, after it priced S$400 million worth of 4.25% perpetual capital securities first callable in 2027.

The listing is down by 11% in the last one month, amid growing recessionary concerns.

In terms of stock outlook, the blue-chip counter has an average rating coming in close to ‘outperform’, alongside an average share price target of S$34.40 (based on the most updated SGX StockFacts data).

The price target equates to a 30.3% upside potential from UOB’s last traded stock price of S$26.40.

Last month, RHB’s equity research team slashed its price target on UOB shares to S$32.70 from S$38.10 alongside a lowered rating of ‘neutral’.

What should you know about UOB’s latest instrument?

On Tuesday, UOB said it has priced S$400 million worth of 4.25% Perpetual Capital Securities with a minimum term period of at least five years.

The capital securities will be issued under the US$30 billion Global Medium Term Note Programme. United Overseas Bank Limited has been appointed the Sole Global Coordinator and Bookrunner for the issuance.

This latest instrument is subject to a reset on 4 October 2027 (and every five years thereafter) to a rate equal to the then-prevailing five-year Singapore Overnight Rate Average Overnight Indexed Swap (SORA-OIS) plus the Initial Spread of 1.47%.

Distributions are payable semi-annually in arrear, unless cancelled by the company at its sole discretion or unless the company has no obligation to pay the distributions, in each case subject to the terms and conditions of the perpetual capital securities.

The distributions are non-cumulative and distributions which are not paid in accordance with the terms of the perpetual capital securities will not accumulate or compound.

The securities are expected to be rated Baa1 by Moody’s Investors Service, BBB- by Standard & Poor’s Rating Services and BBB+ by Fitch Ratings.

They are also intended to qualify as Additional Tier 1 regulatory capital of the company.

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