Beijing-based Sunshine Life Insurance Corp launched an extremely well received $1.5 billion bond offering on Wednesday, ending a recent drought among Chinese credits tapping the offshore credit market.
Pent up demand helped spur the order book, which topped $6.5 billion before dropping back slightly to $6 billion after price guidance was revised.
Bankers said there was a fairly even split between a three-, five- and 10-year tranche.
The A1/Baa1 rated Reg S deal represents the second issue from a Chinese insurer this year following Ping An’s $1.2 billion dual tranche offering in January, which also attracted a strong $5.4 billion order book.
“This was a fairly large order book for an inaugural borrower,” said one syndicate banker.
“But the final outcome was within our expectations since investors are making good returns from investment-grade corporate debt at the moment,” the banker added.
The three-year and five-year were initially marketed at 190bp and 220bp over Treasuries, before pricing was tightened to 5bp either side of 170bp over and 2.5bp either side of 220bp over.
The 10-year was marketed at 310bp over Treasuries before pricing was tightened to 2.5bp either side of 285bp over.
Final pricing for a $500 million three-year tranche was fixed at 99.845% on a coupon of 2.5% to yield 2.554% or 165bp over Treasuries, according to a term sheet seen by FinanceAsia.
A $700 million five-year note was priced at 99.784% on a coupon of 3.15% to yield 3.197% or 197.5bp over Treasuries.
Final pricing for a $300 million 10-year tranche was fixed at 99.158% on a coupon of 4.5% to yield 4.606% or 282.5bp over Treasuries.
Comparables
Bankers said the closest comparables for the three-year and five-year notes are fellow insurer, Ping An's, 2019 and 2021 bonds. On Wednesday, they were respectively trading on a G-Spread of 128bp and 142bp.
For the 10-year tranche, bankers cited China Taiping Insurance's November 2022 and October 2023 bonds, which were trading on a G-Spread of 209bp and 239bp, respectively.
Sunshine Life is much smaller than Ping An, ranking as the country’s 12th largest life insurer by written premiums.
Its bond deal also has a one-notch lower rating of Baa1 from Moody’s compared to Ping An’s A3 level. China Taiping has a similar BBB+/A- rating.
In a sales note ahead of pricing Mizuho calculated fair value for the three-year, five-year and 10-year tranches at 175bp, 205bp and 295bp over Treasuries.
On this basis pricing is aggressive, with the three-year pricing 10bp through, the five-year 7.5bp through and the 10-year 12.5bp through.
However, credit analyst Mark Reade said Sunshine's debt offering looked attractive compared to other dollar debt offerings from Chinese banks and insurers. "It should be sufficient to attract decent onshore investors appetite - albeit potentially not as much appetite as for a similarly-rated SOE," he commented.
Proceeds from the debt sale will be used for working capital and general corporate purposes.
Hotel acquisitions
Sunshine shares a similar appetite for overseas hotel acquisitions with the similarly acquisitive Anbang Insurance Group. It has also ratcheted up its "Going out" strategy in recent years, though in a smaller scale.
In February last year, the group acquired New York's Baccarat Hotel for $230 million. This valued each room at the Midtown Manhattan property for more than $2 million, making it one of the most expensive hotel deals ever on a per room basis.
In November 2014, the group bought Sheraton on the Park in Sydney for A$463 million ($401 million) and formed a strategic cooperation with US hotel group Starwood Hotels and Resorts Worldwide, the parent company of Sheraton.
According to its website, state-owned oil giant Sinopec Group, China Southern Airlines and Chalco, a metal major, are among its major investors.
Joint global coordinators for the bond deal are: HSBC, ICBC International and JP Morgan, while CMB International, Morgan Stanley and CCB International joined the trio as joint bookrunners.
