Ping An Insurance (Group) Co. has successfully priced a substantial offering of $3.5 billion in convertible bonds, marking its entry into a growing trend of equity-linked financial instruments in Asia over recent months. Following the announcement, the company’s shares experienced declines on both the Hong Kong and Shanghai exchanges.
The convertible bonds, which are set to mature in 2029, feature a coupon rate of 0.875%. The initial conversion price is set at HK$43.71 per H share, reflecting a premium of approximately 21% compared to the stock’s closing price in Hong Kong on Monday. Bloomberg News reported details of the transaction, citing sources familiar with the matter.
In addition to the bond offering, Ping An will also execute a share placement designed to assist investors in hedging their positions related to the newly issued bonds.
In light of rising borrowing costs, many Chinese companies have turned to convertible bonds as a cost-effective fundraising solution. The tech sector has particularly embraced this trend; for instance, Alibaba Group Holding Ltd. raised a record $5 billion through a convertible bond issuance in May, while JD.com Inc. secured $2 billion via similar instruments.
During May and June, Chinese firms collectively garnered nearly $13 billion from convertible bond offerings, including a $2 billion transaction involving Lenovo Group Ltd. and Saudi Arabia’s sovereign wealth fund. This surge of activity made the second quarter the most prolific for convertible bonds since the end of 2021, according to Bloomberg data.
Ping An plans to utilize the proceeds from this bond offering to bolster its core business and enhance its capital position, focusing on strategic initiatives in the healthcare and elderly-care sectors, as well as for general corporate needs.
