Cathay Life Insurance, Taiwan's biggest life insurance company, has seen its issuance of $600m 10-year overseas subordinated corporate bonds oversubscribed by around three times.
This is the first time that a Taiwanese insurance company has issued US-dollar bonds in the international bond market.
The life insurer priced its $600m 10-year overseas subordinated corporate bonds at a coupon rate of 170 basis points above the 10-year US Treasury bond interest rate, according to a company statement.
The issuance, made via the wholly-owned subsidiary, Cathaylife Singapore, has a coupon rate of 5.95%. The issuance yield is 5.988%.
The issuance size of $600m is higher than the original estimate of $500m. In terms of investor distribution, funds/asset management companies accounted for 72%, insurance/retirement funds 17%, banks 7%, and others 4%.
Cathay Life pointed out that the structure of this bond issuance is that Cathaylife Singapore is the issuer and Cathay Life is the guarantor for the full repayment of the principal and interest of the bonds upon maturity.
The funds raised will be used to strengthen Cathay Life's financial structure, enrich its capital, and improve its capital adequacy ratio.
Fitch Ratings has assigned the offshore US-dollar Tier 2 subordinated capital bonds a 'BBB+' rating. The 10-year bonds due 2034 are rated one notch below Cathay Life's IDR.
Cathay Life established an SPV, Cathaylife Singapore, in Singapore on 5 June 2024 after the Financial Supervisory Commission announced in March 2024 that it is allowing Taiwanese insurers to issue bonds that count towards capital through the setting up of SPVs overseas. This will diversify insurers' capital-raising channels to strengthen their regulatory solvency positions.
Cathay Life is a wholly owned subsidiary of Cathay Financial Holding which is Taiwan's largest financial holding company by assets.