SAN FRANCISCO: Apple Inc sold US$1.38 billion of US dollar-denominated bonds in Taiwan, while Canada’s Manulife Financial Corp also priced US$1 billion of securities, as such debt offerings jump amid demand from insurers.
The sales bring issuance of such corporate securities to US$23 billion for the year, up by 53 percent from the same period last year, data compiled by Bloomberg showed.
Domestic life insurers looking for higher yields are driving the trend, said Lawrence Lai (賴星旅), Asia rates strategist at Standard Chartered PLC.
Apple’s 30-year note has a 4.15 percent coupon and Manulife’s bond with the same maturity has a 4.7 percent coupon.
Such multi-decade debentures also suit the needs of life insurers, which must make longer-term investments, Lai said.
A regulatory change in 2014 opened the floodgates for about US$600 billion of life insurance assets in Taiwan to invest more freely in foreign-currency bonds. Since then, global issuers including Goldman Sachs Group Inc have sold almost US$80 billion in US dollar debt to Taiwanese life insurers.
The largest offering in the nation’s market for bonds in foreign currencies was AT&T Inc, which raised US$2.62 billion last year.
“At the beginning there were more financials, but life insurers do not really want to hold more financials,” Lai said. “Now the mix is healthier.”
As yields have fallen at home, life insurers in Taiwan have avoided local debt in favor of foreign notes with higher yields.
For the first time since 2008, life insurers did not buy any 20-year government bonds in an April sale. Instead, banks picked up the notes at a record-low 1.36 percent yield.
Financial Supervisory Commission Chairman Ding Kung-wha (丁克華) said in an interview last month that, although he was concerned about exchange rate and other risks associated with the US$300 billion of life insurance funds invested in foreign currency assets, he was not in favor of closing the spigot.
