Kyobo Life Insurance to issue $500m in hybrids

Kyobo Life Insurance Co., a major life insurer in South Korea, said Friday it will issue $500 million worth of hybrid bonds next week in a bid to further bolster its financial health.

The 30-year bonds will all be sold to offshore investors Wednesday and will carry an annual interest rate of 5.9 percent and a call option after five years, said the country's third-largest life insurance company.

Hybrid bonds, which combine both debt and equity features, help financial institutions raise their capital ratios. A call option gives the issuer the right of termination before maturity.

The planned sale is designed to brace for potential risks in the run-up to the implementation of tougher international financial requirements in 2023, it added.

As of end-March, Kyobo Life Insurance's risk-based capital (RBC) ratio -- the actual solvency capital divided by the minimum solvency capital required -- came to 205.1 percent. Local life insurers are advised to have 150 percent or more.

It will mark the first hybrid bond sale in two years by local life insurance companies. In September 2020, Tongyang Life Insurance Co. raised $300 million through a hybrid bond sale.

Kyobo Life Insurance's debt sale has been co-managed by Citigroup Global Market Security, HSBC, JP Morgan and Nomura Securities. (Yonhap)