BEIJING, Jan 22 (Reuters) - China’s insurers can now sell bonds in the interbank market to replenish their capital, Chinese regulators said, a move that will also deepen the fixed-income market.
The interbank bond market is China’s biggest and most liquid fixed-income market, so insurers’ financing abilities could improve if they were allowed to raise capital there.
The measure would strengthen the financial positions of insurers and make them more risk-proof, the central bank said in a statement on Thursday.
At the same time, it would deepen China’s interbank market by introducing more investment options, it said.
Under the change, insurers could sell debt with maturities of at least five years in the interbank market, the central bank said.
Buyers of these bonds would rank ahead of shareholders but behind other bond investors in the hierarchy of creditors if there were a bankruptcy, the central bank said.
The decision to let insurers sell bonds in the interbank market was first announced on Wednesday by the central bank and China’s insurance regulator.
Following rapid growth in China’s insurance sector in recent years and a spate of investment in the country’s housing and infrastructure projects, some analysts say the smaller Chinese insurers are financially weak. (Reporting by Koh Gui Qing; Editing by Nick Macfie)