QBE Insurance Group has priced its issue of AU$500 million of floating rate subordinated notes.
In an August 19 release, the insurer noted: “The subordinated notes will have a term of 16 years (maturing August 25, 2036), are callable by QBE with APRA’s prior written approval at six years and each interest payment date thereafter (and if certain tax or regulatory events occur), and are scheduled to pay interest quarterly at an interest rate equal to the three-month BBSW (Bank Bill Swap) rate plus a margin of 2.75% per annum.”
Under the Australian Prudential Regulation Authority’s capital adequacy framework, the subordinated notes are eligible as Tier 2 Capital of QBE. Following settlement of the issue, the company aims to give a notice of redemption in respect of its outstanding AU$200 million subordinated notes, due 2040, issued nearly five years ago.
“QBE intends to update the market on further redemption initiatives in due course and note that it is QBE’s current intention to maintain debt to equity around the midpoint of the 25%-35% target level,” added the Sydney-headquartered group.
Meanwhile Fitch Ratings has assigned a ‘BBB’ rating to the newly issued subordinated securities.
The credit rating agency said the notes will be treated as 100% debt in Fitch’s financial leverage ratio calculation, given that they are a dated instrument. It was also noted that net proceeds of the issue will be used for general corporate purposes within QBE.
