Moody's rates Delphi notes Baa3

Moody's Investors Service said it assigned a Baa3 debt rating to the $250 million of fixed-rate senior unsecured notes maturing in January 2020 to be issued by Delphi Financial Group, Inc. (Baa3/ negative).

Proceeds are expected to be used to repay debt outstanding under the company's revolving credit facility, which had about $222 million outstanding as of the end of the third quarter. The notes are a drawdown from a shelf registration filed in December 2008.

"Delphi's debt issuance is a prudent step in improving its capital structure," Moody's senior vice president Scott Robinson said in a statement.

"By terming out its revolving credit facility, Delphi eliminates refinancing risk associated with the facility, which we believe more than offsets the negative credit impact of the increase in interest cost. Our negative outlook on Delphi continues to reflect our concerns about potential losses on the company's investment portfolio in a downside scenario."

The Baa3 senior debt rating reflects the company's solid, stable operating earnings and the established market position of its wholly owned primary life insurance company Reliance Standard in the group employee benefits market, the agency said.

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