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Nonghyup Life Insurance Co. Nonghyup Life Insurance Co. of South Korea is slated to issue 10-year-maturity subordinated bonds worth 600 billion won ($492.6 million) on March 31, according to investment banking sources. The insurer initially aimed to sell subordinated bonds worth 300 billion won. However, it expanded the issuance as the bonds were more than three times oversubscribed in the bookbuilding on March 24.The bond coupon rate is 4.35% per year, 70 basis points higher than 3.65%, the average AA bond yield calculated by Korea’s rating companies. Nonghyup Life takes AA-rated bonds as subordinated bonds. The 4.35% coupon rate is also nearly 100 basis points over the bond coupon rates by other insurers that issued subordinated bonds last year. Korean insurance companies are rushing to increase their equity capital ahead of two new solvency regulations effective from Jan. 1, 2023. To increase their risk-based capital (RBC), the insurers are scurrying to amass ample capital by issuing hybrid securities and bonds as well as selling properties. Some insurers have been struggling with fundraising due to tepid interest from investors. Nonghyup Life, however, attracted investors thanks to its operational stability and ample capital of parent group Nonghyup Financial Group Inc.After selling the bonds, the insurer will inject funds in debts, domestic stocks and short-term investment products, as well as repaying some of the subordinated debts it issued in 2017. Nonghyup Life’s RBC ratio is expected to rise to 238% from 210.5% as of the end-2022, once it raises capital via the bond issuance.By Hyun-Il Leehiuneal@hankyung.comJihyun Kim edited this article.
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