Ping An Insurance (Group) Co priced an offering of US$3.5 billion in convertible bonds, joining a wave of issuance of the equity-linked instruments in Asia over the past few months. Its shares in Hong Kong and Shanghai declined. 

The company sold the bonds due in 2029 with a coupon of 0.875%, according to a statement to the Stock Exchange of Hong Kong on Tuesday. The initial conversion price is HK$43.71 per H share, representing a premium of about 21% over the stock’s closing price in Hong Kong on Monday. Bloomberg News earlier reported on the deal, citing people familiar with the matter. 

Concurrent with the convertibles offering, the firm will conduct a share placement aimed at facilitating hedging for investors buying the bonds, according to terms of the deal obtained by Bloomberg News.

Chinese firms have been turning to convertible bonds to raise funds at cheaper rates than traditional debt given higher borrowing costs. They have been particularly popular in the tech sector - Alibaba Group Holding Ltd sold a record US$5 billion convertible bond in May, while JD.com Inc raised US$2 billion through the notes.

In May and June alone, Chinese companies raised almost US$13 billion from convertible bonds, including a US$2 billion sale of such notes from Lenovo Group Ltd to Saudi Arabia’s sovereign wealth fund. The flurry of deals meant the second quarter was the busiest for convertibles since the last three months of 2021, according to data compiled by Bloomberg.

Ping An intends to use proceeds from the offering to further develop the group’s core business and strengthen its capital position to support strategic initiatives in the healthcare and elderly care sectors, and for general corporate purposes, the company said.

The company’s shares dropped as much as 5.8% in Hong Kong, the most in over a month, to HK$33.95 on Tuesday. Its Shanghai-listed stock fell as much as 4.4%. 

Morgan Stanley and JPMorgan Chase & Co are the joint global coordinators.

  - Bloomberg