GreatWall Life gets nod for $520 million bond as insurers' capital rush rolls on
What's the deal? China's GreatWall LifeDealroom has a profile for this one. Try Dealroom → won regulatory approval to issue US$481.3M in 10-year redeemable capital supplementary bonds, the Beijing Financial Regulatory Bureau disclosed. Beijing LifeDealroom has a profile for this one. Try Dealroom → secured approval the same day for a US$82.5M perpetual capital bond.
Why now? Insurers are raising capital at pace. By September 15, nearly 20 insurers had won approval for or completed capital-replenishment bond issues this year, totalling more than US$8.25B.
The context: Perpetual bonds now dominate. They accounted for over 60% of the US$4.41B issued in the first half; by September the share had climbed to roughly 70%.
The year's biggest single issue came from PICC LifeDealroom has a profile for this one. Try Dealroom →, cleared in July for US$1.38B in perpetual bonds. New China LifeDealroom has a profile for this one. Try Dealroom → completed a US$1.38B perpetual bond the same month, with a first-five-year coupon of 1.90%.
Falling costs: Declining market rates have made debt cheaper. Coupons ranged from 2.05% to 2.98% in the first half, then dropped — PICC Life's August perpetual bond hit 1.88%, oversubscribed 3.43 times. GreatWall Life issued a US$137.5M bond in February at 2.54%; its new tranche is expected to price lower.
Why bonds? Debt avoids diluting existing shareholders and replenishes regulatory capital quickly, said Zhu Junsheng, former research head at Tsinghua University's PBC School of Finance. That flexibility suits insurers reluctant to tap shareholders repeatedly, he said.
The alternative — raising equity — takes longer and involves share pricing and shareholder-qualification reviews, often more than six months. Bonds can reach the interbank market in one or two months once solvency and quota approvals are in place, one brokerage analyst said.
What's driving demand? Capital constraints are rising, not solvency crises, Zhu said. The full rollout of the "C-ROSS" phase-two rules tightened capital standards and raised risk factors, particularly for long-term equity investments and property.
Falling rates squeeze investment returns while riskier equity holdings demand more capital. Life insurers' fast-growing new premiums also consume capital, especially protection-type products.
The signal: The issuer base is broadening. Where large insurers dominated with issues above US$1.38B in past years, sub-US$687.5M deals from mid-sized firms — many young and near regulatory solvency lines — now make up the bulk, one analyst said. With long-term capital available below 2%, down from over 3.5% five years ago, the window looks hard to pass up.
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