Shinhan Life Insurance completed a 500 billion won ($366 million) subordinated bond sale as South Korean insurers scramble to refinance debt ahead of upcoming redemption deadlines.
The June 5 issuance attracted 1.2 trillion won in investor demand, reflecting market appetite for insurance sector debt despite regulatory pressures. The bonds carry a 3.40% annual rate, marking the first time since 2021 that industry players achieved borrowing costs in the 3% range.
The timing proves strategic. Shinhan Life faces a 300 billion won hybrid securities call option in August, part of a broader wave of redemptions hitting the sector. Heungkuk Fire & Marine Insurance, Fubon Hyundai Life Insurance, and Meritz Fire & Marine Insurance all face similar deadlines through November.
The competitive pricing suggests Shinhan Life’s relatively strong financial position compared to struggling peers. Recent trading shows some insurers’ subordinated bonds trading 0.7 to 0.9 percentage points above private evaluation firm assessments, indicating investor concerns about creditworthiness.
Korean financial regulators have tightened oversight following Lotte Insurance’s failed refinancing attempt, requiring insurers to maintain capital ratios above 150% for early bond redemptions. This regulatory scrutiny has created a two-tier market where stronger insurers access favorable terms while weaker players face mounting pressure.
The successful issuance demonstrates investor confidence in Shinhan Financial Group’s broader franchise, though questions remain about sector-wide refinancing capacity as more redemptions approach.
