Chinese insurers see new boom in bond issues in 2018: ratings agency report

Chinese insurance companies will see another boom in bond issues this year in response to strict regulations in the domestic financial market, United Ratings said in a report.

In the first half of the year, Chinese insurers made 118 domestic bond issues valued at 432.868 billion yuan ($63.1 billion). There were 16 overseas issues valued at $8.91 billion, United Ratings said.

The company forecast that domestic bond issues are likely to increase substantially in the second half, while overseas bond issues may slow. However, there is still much room for overseas bond issues in the long run, said the report.

Domestic insurance companies still face barriers such as low credit ratings when issuing bonds overseas, according to the report. It noted that most insurers issue senior debt overseas, although some larger companies have offered subordinated debt or even ultra-long-term subordinated bonds.

Since 2016, overseas dollardenominated debt has risen significantly, lifted by the government’s support for enterprises to issue bonds in foreign markets and the appeal of low interest rates in those markets.

Amid China’s efforts to reduce leverage in the financial market, the domestic bond market has been shrinking rapidly, the report added. As part of a national effort to fend off financial risks, China been tightening regulations for raising leverage.