UPDATE 1-QBE Insurance's dollar 'gender equality bond' more then 20-times oversubscribed
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HONG KONG, Nov 13 (Reuters) - Australia's QBE Insurance Group drew applications of more than $8.25 billion for a $400 million "gender equality bond", bankers said, marking the first such issuance denominated in a G3 currency.
Bonds like the ones QBE sold invest in paper issued by companies that support workplace gender equality.
The QBE bond, a capital note that is eligible for inclusion as the financial institution's additional Tier 1 Capital, is the first "gender equality bond" issued in a G3 currency--U.S. dollars, euro and yen--a banker involved in the deal said.
In March, National Australia Bank issued a gender equality bond that was the first of its kind, the banker said. That bond was denominated in Australian dollars.
QBE's perpetual bond, callable after 7-1/2 years, was priced last week at a yield of 5.25 percent, 50 basis points inside the initial price guidance following the strong orders.
In secondary trading, the bonds traded as high as 101.50 cents on the dollar, reflecting strong investor backing.
"The bonds performed extremely well in secondary due to both strong technicals in a low rates environment and investor demand for ESG bonds," said Raymond Lee, portfolio manager for Kapstream Capital referring to environmental, social, governance (ESG)investments.
"The focus on ESG among the general investor base continues to grow, and the rarity of ESG bonds in additional Tier 1 format supports bonds technicals."
Funds raised will be invested in bonds issued by companies that have policies of supporting workplace gender equality.
QBE Insurance Group Treasurer Paul Byrne said the universe of companies includes those that have signed up to the United Nations seven principles on Women's Empowerment and entities referenced in the Equileap 2017 Gender Equality Report. He said QBE could issue more such bonds.
Demand for ESG products has grown as the asset class finds greater mainstream acceptance among institutional investors.
Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund with $1.3 trillion under management, plans to raise its allocation to environmentally and socially responsible investments to 10 percent of its stock holdings from 3 percent.
QBE's bonds were mainly taken up in Asia with 51 percent participation and Europe and Middle East which accounted for 37 percent, while U.S. made up 12 percent of the deal.
Real money accounts dominated the deal with fund managers comprising 86 percent. Private banks took up nine percent, insurance companies three percent and others two percent.
(Reporting by Umesh Desai; Editing by Richard Borsuk and Sam Holmes)