United Overseas Bank (UOB) has established an $8bn (Eu7.5bn, SGD11.3bn) covered bond programme, the Singaporean bank announced today (Monday), and the group’s CFO said the programme will help it maintain a solid funding base and diversify its investor base in Europe.

UOB is one of the Singaporean banks that had been expected to take up covered bonds and join DBS Bank in issuing after DBS launched the first covered bond from the country in July, with a $1bn five year deal. That came after the completion of amendments to Singapore’s covered bond framework the previous month.

Lee Wai Fai, group chief financial officer at UOB, said the global covered bond programme will ensure the bank maintains a solid funding base that can support its clients through business cycles.

“UOB turns 80 this year and central to the bank’s stable growth over the last eight decades has been its disciplined funding strategy,” he said. “Through our covered bonds programme, we can efficiently diversify our funding sources and broaden our investor base while offering investors another avenue to participate in the growth of the bank.”

UOB said that through the programme it plans to expand and diversify its investor base in Europe, citing strong demand there from fund managers, banks and insurance companies for high quality secured debt instruments.

BNP Paribas and UOB arranged the new programme, which has as its guarantor Glacier Eighty Pte Ltd. Issuance is expected to be rated triple-A by Moody’s and Standard & Poor’s, according to the programme’s prospectus – the issuer is rated Aa1/AA-/AA- by Moody’s, S&P and Fitch.

Oversea-Chinese Banking Corp is expected to be the next Singaporean bank to enter the covered bond market.