QBE Prices the Exchange of £325 Million Subordinated Notes; QBE up 9% in May
The Standard and Poor’s recently revised QBE’s outlook from “stable” to “positive” and affirmed the ‘A+’ financial strength ratings (FSR) on its core operating companies.
QBE Insurance Group Limited (ASX:QBE) announced on 4 May 2016, that it has launched an invitation to holders of its existing notes to exchange their notes for new GBP – denominated subordinated notes that are due to mature in 2042, under its recently established US$4,000,000,000 Medium Term Note Program.
The company has offered this exchange as a measure to improve its capital efficiency by the replacement of the existing notes with new notes, which will satisfy the Tier 2 capital requirements under the Australian Prudential Regulation Authority’s (APRA) capital adequacy framework.
Subsequently, the company announced today that it has successfully priced the new notes, exchanging £291,025,000 of existing notes for the new ones.
These notes will bear an interest of 6.115% per annum, paid semi-annually in arrear and have a term of 26 years, maturing on 24 May 2042.
Mr. Pat Regan, QBE’s Group Chief Financial Officer commented on the issue of new notes: “We were particularly satisfied with the level of investor participation in our Tender Exchange transaction, with the new notes further enhancing the quality of the Group’s regulatory capital position. We were also extremely pleased with the pricing levels achieved on the new bonds.”
Settlement and issue of the new notes is scheduled for 24 May 2016.
Positive Outlook from S&P
Standard and Poor’s recently revised the company’s outlook from “stable” to “positive” and affirmed the ‘A+’ financial strength ratings (FSR) on its core operating companies.
Mr. John Neal, QBE Group’s CEO commented on the rating agency’s release: “I am very pleased that S&P recognises both the progress we have made in improving QBE’s performance and the strength of our capital base.”
QBE has risen 2.5% since today's announcement and was last traded at $12.16 (as at 10:40 am (AEST)).
Author: Kaivalya Kandarpa
May 19, 2016
Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.