Moody’s rates Bupa Finance debt Baa2 (hyb)

Moody's Investors Service said it assigned a Baa2 (hyb) rating to the unguaranteed subordinated debt issued by Bupa Finance plc, the intermediate holding company of all of Bupa group's insurance and non-insurance operations.

The new £400 million debt is a 10-year bullet subordinated instrument. The notes carry a fixed-rate coupon of 5% per annum with mandatory coupon deferral on breach of Solvency II's Solvency Capital Requirement (SCR).

Moody’s said the Baa2 (hyb) rating reflects: (a) The subordination of the debt; (b) the mandatory weak coupon deferral mechanisms; and (c) the cumulative nature of coupons, in case of deferral.

The Baa2 (hyb) rating is in line with the agency’s standard notching practices on rating insurance holding company subordinated debt, with the assigned rating four notches below the A1 insurance financial strength rating on the UK insurance operating entity, Bupa Insurance Ltd.

The notes rank pari passu with the existing unguaranteed subordinated debt instrument issued by Bupa Finance in 2013.

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