China Life has sold the first bonds under the China
Risk Oriented Solvency System (C-ROSS), the
country’s version of Solvency II. Its structure
could set a precedent for PRC hybrid instruments.
The China Insurance Regulatory Commission (CIRC)
announced C-ROSS rules in February, but there is a transition
period until they are implemented in 2016. The China Life core
tier 2 bonds, which priced on June 25, were the first to test
these regulations, while also complying with the old
Despite the fact that this was a market first,
China Life sold $1.28 billion in bonds priced at 4%. The bonds,
rated A3(hyb) by Moody’s and A- by Fitch, were
structured as 60-year non-call five bonds with an automatic
rollover at the end of the first 60 years.
"This is a new regulatory regime with a new set of
regulatory capital requirements – core capital and