(Bloomberg) -- Aeon Life Insurance Co, a Chinese insurer backed by Dalian Wanda Group Co. chose not to exercise a call option on a subordinated bond in a move that usually signals an issuer’s liquidity strains or refinancing challenges. 

The insurance company decided to skip the March call option on its 2 billion yuan ($278 million) subordinated bond maturing in 2029 that was used to replenish its capital, according to a statement from the company published on the Chinamoney.com website Wednesday. 

The coupon on the notes will jump to 7.25% from 6.25%, the filing shows. The decision comes at a time yields on subordinated bonds sold by lower-rated Chinese financial institutions have fallen to 4.64%, the lowest level since 2017, based on a ChinaBond index. 

Aeon Life’s corporate rating was downgraded to A- from A in June by China Bond Rating Co., which cited a range of worsening metrics including liquidity, profitability and solvency. The company has also failed to disclose its financial results and operating data since the second quarter of last year. 

Dalian Wanda was the single biggest shareholder of Aeon Life as of March 2023, accounting for 11.55% of its total shares, according to a China Lianhe Credit Rating report.

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