Rarity value drives demand for FWD's perpetual bonds

Billionaire Richard Li's Hong Kong-based insurance group draws frenzied demand for its first perpetual bonds.

Hong Kong's FWD Group, the insurance arm of billionaire Richard Li's Pacific Century Group, raised $250 million through the sale of a perpetual bond on Tuesday, taking advantage of investors' hankering for yield.

The privately held insurer, rated Baa2BBB by Moody's and Fitch, garnered more than $6.75 billion of demand from 266 accounts, reflecting risk-on sentiment towards these hybrid instruments, which have no fixed maturity date and are treated as equity rather than debt.

Perpetual bonds are popular because they carry a return of 5% in today's zero-interest-rate conditions, a Singapore-based portfolio manager told FinanceAsia. The high tolerance for credit risk...

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