Investors trust Baloise more than Swiss Life

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Swiss Life has to hand over more money to investors than Baloise. (Image: Claudio Schwarz / unsplash)

Normally, bond issues by insurance groups are unspectacular. But now they are causing a stir at the Baloise Group and at the Swiss Life Group.

The announcement sounds unspectacular in itself. Basel-domiciled insurance group Baloise successfully issued a third Green Bond at the start of the year, the group announced today, Friday.

Following the debut of a green bond in 2021, Baloise was thus able to issue its third bond through its holding company. The company intends to use it to finance green real estate under the existing “Baloise Green Bond Framework”, it added.

Tranche for comparison

So far so good. But the successfully-placed bond is a 9-year senior green bond for a volume of 175 million Swiss francs with a coupon of 2.20 percent, and this raises eyebrows.

Competitor Swiss Life also got money from investors at the start of the year. The group, which specializes in life insurance, recently issued three senior bond tranches on the Swiss financial market through its holding company, one of them 200 million Swiss francs with a term of 9 years, as research by revealed.

However, the coupon was at 2.61 percent.

Purposes different

Certainly, there are a few days of difference between the two financing rounds. The total volumes of the issues are also different and the purpose of the money at Swiss Life is different with general corporate purposes than that for green real estate. 

However, investors in the two insurance groups obviously differ significantly in the price they pay for borrowing money.

Millions saved

While Baloise pays 2.2 percent in coupon, the Swiss Life Group has to pay 0.41 percentage points more annually. In absolute terms, Baloise formally saves 717,500 Swiss francs per year.

Over nine years, the Basel-based company pays around 6.5 million Swiss francs less than Swiss Life in Zurich – based on its issue volume.

That’s quite respectable. And because the interest that issuers have to pay to bond buyers reflects the risk for which investors are compensated in the respective investment, the statement that investors have more confidence in Baloise than in the Swiss Life Group when it comes to green bonds is therefore totally valid.

Helping banks

However, this may well be due at least in part to the good hands of the financial institutions that support the transactions in each case.

In the case of the Basel-based company, the Zurich cantonal bank ZKB and the bank Credit Suisse, which is in crisis, helped as joint lead managers. And the Basler Kantonalbank acted as co-manager.

Swiss Life does not provide any information on the financial institutions helping in their communiqué.


Investors trust Baloise more than Swiss Life

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