DBS

DBS: Begins tapping US$ commercial paper mkt through set up of US$5b facility to diversify its non-SGD funding sources. The facility which is a first for DBS to tap the USD short-term commercial paper mkt, helps to diversify its non-SGD funding sources.

The US commercial paper programme allows DBS to further diversify its funding sources into the US market and modify the tenors of its liability base for liquidity mgt. View is likely positive, as Asian banks such as DBS steps up their trade financing business which is denominated in USD as traditional players like EU banks who are facing capital constraints, retreat from the mkt.

As a gauge, DBS' group loan-to-deposit ratio is 62% so it swaps surplus SGD deposits for foreign currencies when needed, vs its US dollar loan-to-deposit ratio was 171%. DBS already has a longer tenor US$15b program and a US$5b euro program. The program has been rated A-1+ by S&P, P-1 by Moody's and F1+ by Fitch. We do not rule out a move by local banks (OCBC and UOB) to follow such a move soon.