Fitch Ratings has assigned Friends Provident Holdings proposed issue of hybrid securities an expected ‘BBB+(exp)’ rating.
The final rating is contingent on the receipt of final documents conforming to information already received.
The issuance will replace a significant proportion of the internal hybrid securities issued to Resolution Holdings (Guernsey) Limited, which will use the proceeds to redeem the acquisition bridge financing which was required for the AXA UK Life acquisition. The new issue is therefore not expected to have a material impact on financial leverage ratios.
The proposed new issue, classified as Lower Tier 2 notes for regulatory purposes, will be a bullet security, with a maturity of around ten years and is not callable earlier under normal conditions. The notes will be subordinated to senior creditors, and guaranteed on a subordinated basis by Friends Provident Life & Pensions Ltd (Issuer Default Rating ‘A’/Stable), which is the main operating subsidiary of the group. The securities will pay a fixed rate of interest until maturity. The terms of the issue include mandatory interest and principal deferral conditions, with triggers based on regulatory solvency and legal insolvency.
The terms and conditions of the notes have been designed having had regard to the latest proposals for Tier 2 own funds eligibility under the proposed Solvency II regime.
Source : Fitch Press Release