Ping An Insurance (Group) Co. has successfully priced an offering of $3.5 billion in convertible bonds, contributing to the recent surge of equity-linked instrument issuances across Asia. The sale, disclosed in a statement to the Hong Kong stock exchange on Tuesday, involves bonds maturing in 2029 carrying a coupon of 0.875%. Initial terms set the conversion price at HK$43.71 per H share, reflecting a premium of approximately 21.3% over Monday’s closing stock price, as reported earlier by Bloomberg News, citing sources familiar with the matter.
In conjunction with the convertible bond offering, Ping An will also execute a share placement designed to facilitate hedging strategies for bond investors, according to details of the transaction obtained by Bloomberg News.
The appeal of convertible bonds for Chinese firms lies in their ability to raise funds at relatively lower costs compared to conventional debt amid prevailing higher borrowing expenses. This financing avenue has notably gained traction in the technology sector, exemplified by Alibaba Group Holding Ltd.’s record $5 billion issuance in May and JD.com Inc.’s $2 billion raised through similar notes.
Chinese companies have collectively raised nearly $13 billion from convertible bonds in May and June alone, underscored by Lenovo Group Ltd.’s $2 billion issuance to Saudi Arabia’s sovereign wealth fund. The surge in activity marked the busiest second quarter for convertible bonds since the final quarter of 2021, according to data compiled by Bloomberg.
Ping An intends to allocate the proceeds from the offering towards enhancing its core business operations, bolstering its capital position to support strategic initiatives in healthcare and elderly care sectors, and for general corporate purposes, the company stated.
Morgan Stanley and JPMorgan Chase & Co. are serving as joint global coordinators for the transaction.
