A MILESTONE IN THE DEVELOPMENT OF THE SINGAPORE
FIXED INCOME CAPITAL MARKET

S$185 MILLION MORTGAGE-BACKED BONDS CUM
REDEEMABLE PREFERENCE SHARES

DBS Bank achieved another milestone by introducing the first asset securitisation transaction on the NOL Building (the `Building’). Although securitisation is new in Singapore, it is one of the more significant innovations in the fixed-income capital markets today.

Through asset securitisation, Neptune Orient Lines Ltd (NOL) is able to sell the NOL Building to Chenab Investments Ltd (CIL), a Singapore incorporated special purpose company. CIL is established for the specific purpose of facilitating the financing of the transaction.

NOL Building is an ideal asset for securitisation as the transaction is supported by a well-defined cash flow stream from the 10-year lease rental agreement entered between CIL and NOL.

Securitisation also enhances the credit profile of the securities. This is done through a credit enhancement structure and securitisation terms.

The transaction raises S$185 million for CIL through the issue of S$185 million 10-year fixed rate mortgage-backed Bonds.

Another innovative feature is that Bondholders are given an opportunity to share in the realised gains upon the sale of the Building. This is provided for through the issue of 185 Preference Shares which will be subscribed by the Bondholders.

DBS Bank has entered into a bought deal with CIL, whereby it will subscribe for all the Bonds cum Redeemable Preference Shares. It is DBS Bank’s intention to place out the Bonds cum Redeemable Preference Shares via private placement to investors after all conditions precedent have been met.