FWD’s New Issuances and 2029 Bond Tender Offer

• FWD Group Limited (hereinafter “FWD”) plans to issue two new subordinated USD bonds with tenors of 5 years and 10 years. The indicative yields are approximately 5.73% (based on the 5-year U.S. Treasury yield + 210 basis points) and 6.36% (based on the 10-year U.S. Treasury yield + 230 basis points), respectively (as of 15 Sep).

• Proceeds from the new bond issuance will be used for general corporate purposes, including the refinancing of the USD 900 million FWDGHD 8.400% 05Apr2029 Corp (USD) and the USD 750 million FWDGHD 8.045% Perpetual Corp (USD) bonds.

• The issuer is currently rated BBB+ by Fitch, and the two new USD bonds are expected to be rated BBB-.

• Founded in 2013 by Richard Li, FWD is a Hong Kong-based insurance group offering a wide range of products, including life insurance, medical protection, general insurance, and retirement planning, serving both individual and corporate clients. The group operates across multiple Asian markets, including Hong Kong, Macau, Thailand, Indonesia, Singapore, Vietnam, Japan, and Malaysia. FWD successfully listed on the Hong Kong Stock Exchange in July this year (stock code: 1828.HK), with a current market capitalization of approximately HKD 60 billion.

• In the first half of 2025, FWD continued to deliver solid business growth. Annualized new premiums (APE), which measure the volume of new policy issuance, reached USD 1.25 billion, up 38% year-on-year. New business value (VNB), which reflects the potential profit from new policies and serves as a key profitability indicator, rose 21% to USD 510 million.

• The largest contribution came from the Hong Kong & Macau markets, which benefited from strong demand from local residents, mainland visitors, and the group’s exclusive high-net-worth brand FWD Private. Annualized new premiums in this segment reached USD 640 million, more than doubling year-on-year, while new business value surged 91% to USD 270 million. This drove a 28% increase in post-tax operating profit for the region, reaching USD 130 million.

• In overseas markets, Japan’s post-tax operating profit declined 13% to USD 93 million, primarily due to one-off claims and higher statutory tax rates. In contrast, Thailand & Cambodia, and emerging markets delivered strong performances, supported by improved renewal rates. Post-tax operating profit rose 17% and 191% in Thailand & Cambodia and emerging markets respectively, reaching USD 81 million and USD 38 million. Overall, the group’s profitability continued to strengthen, with net profit for the first half reaching USD 47 million—marking a new interim high in recent years.

• FWD’s credit profile remains broadly stable. As of end-June 2025, its solvency ratio rose from 260% at the end of 2024 to 283%, well above the 100% regulatory requirement, indicating a strong capital buffer. The group’s leverage ratio (total debt/total capital) declined from 25.5% to 23.7%, reflecting a healthy and manageable debt level.

• Total debt stood at USD 2.79 billion, with a well-distributed maturity profile. The group holds approximately USD 1.62 billion in cash and cash equivalents, along with USD 1.39 billion in undrawn credit facilities, demonstrating solid liquidity.

• Supported by its strong operating fundamentals, we believe FWD will continue to benefit from business growth and further strengthen its cash flow, with relatively light debt servicing pressure. The two new bonds, offering indicative yields of 5.7% and 6.4%, present a compelling option for yield-seeking investors. However, investors should pay attention to the longer duration risk associated with the 10-year tranche.

Tender Offer for the 2029 Bond

• Alongside the issuance of the two new bonds, FWD has launched a tender offer to repurchase the FWDGHD 8.400% 05Apr2029 Corp (USD) at a price of $101.65.

• As mentioned in our earlier article “FWD’s IPO: Implications for Bondholders and Early Redemption Risk Assessment”, FWD’s July IPO triggered the early redemption clause for the related bonds, granting the company the right to redeem the 2029 bonds at $101 (plus any unpaid accrued interest).

• According to the tender offer details, FWD plans to exercise its redemption right following the completion of the tender offer (on September 25), targeting the remaining principal of bonds not tendered. Considering the 30–60 day notice period and estimated accrued interest of approximately $0.7 to $1.4, investors who choose to wait for redemption may receive slightly more than the tender price of $101.65, but will need to hold the bond for a longer period.

• Overall, we believe the economic difference between accepting the tender offer or waiting for redemption is insignificant. Investors may decide based on their liquidity needs and time preference.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) hold a position in FWDGHD 8.400% 05Apr2029 Corp (USD) and the analyst who produced this report hold a NIL position in the abovementioned securities.