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Business

Dai-ichi Life plans $2.5bn bond issuance to cash in on ultralow rates

Dai-ichi Life headquarters in Tokyo

TOKYO -- Japan's Dai-ichi Life Insurance plans to issue $2.5 billion of perpetual subordinated bonds this month, sources said Thursday.

It will be the biggest issuance of such bonds by a Japanese life insurer.

The coupon for the first 10 years will be set at around 4%, the lowest among its domestic peers. With easy money policies around the globe holding interest rates down, the company is looking to take advantage of favorable borrowing conditions to strengthen its financial base and raise money for growth-oriented investments.

Dai-ichi Life plans to sell these bonds with no maturity date to institutional investors in the U.S., Europe and Asia.

Subordinated bond holders are given a lower status in bond repayment in relation to ordinary bond holders. Because of this characteristic, the issuing company can list the debt as part of its capital for accounting purposes.

By boosting its capital base, Dai-ichi Life hopes to diversify its management options, including future investments through mergers and acquisitions.

After 10 years, the bond will have a variable coupon or be redeemable.

(Nikkei)

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