Fubon Life Insurance Co (富邦人壽) plans to issue NT$50 billion (US$1.54 billion) of subordinated corporate bonds — on top of the NT$25 billion it issued in the first half of the year — to bolster its financial strength, parent company Fubon Financial Holding Co (富邦金控) said in a regulatory filing yesterday.
The subordinated bonds, with a maturity date of 10 years or longer, would be issued in one or several tranches within one year through public offerings, the filing said.
Fubon Life and its local peers have been gearing up to issue new debt to strengthen their financial structure and increase their risk-based capital ratio, as Taiwan’s insurance sector is to adopt the International Financial Reporting Standard 17 (IFRS 17) and the new Insurance Capital Standard framework in 2026.
Photo: Kelson Wang, Taipei Times
A subordinated bond is a type of debt that ranks lower in priority, with respect to claims on assets in case of bankruptcy or liquidation.
Long-term subordinated bonds have increasingly become a favored channel for life insurers to raise funds, as they are popular among investors in the Taiwanese fixed-income market, given their relatively higher yields.
Fubon Life’s board has authorized the company’s chairman or any designated person to decide the coupon rate of the new offering depending on market conditions, the filing said.
Earlier this year, Fubon Life sold NT$14.88 billion of 10-year subordinated bonds with a coupon rate of 3.7 percent, and NT$10.12 billion of 15-year bonds with a coupon rate of 3.85 percent, Taipei Exchange data showed.
In April, Cathay Life Insurance Co (國泰人壽), the nation’s largest insurer, also announced that it would issue up to NT$50 billion in subordinated bonds, offering 3.7 percent for 10-year debt and 3.85 percent for 15-year debt, exchange data showed.
So far this year, six life insurers — which also include Nan Shan Life Insurance Co (南山人壽), KGI Life Insurance Co (凱基人壽), Shin Kong Life Insurance Co (新光人壽) and Mercuries Life Insurance Co (三商美邦人壽) — have announced plans to issue subordinated bonds to raise funds.
The sector sold a record-high NT$111 billion in subordinated debt last year, data compiled by the Financial Supervisory Commission showed.
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