S&P gives XL convertibles BBB

Standard & Poor's said it assigned its BBB junior subordinated debt rating to XL Capital Ltd.'s (A-/Watch negative) planned $500 million of mandatory convertible securities.

At the same time, the agency said that it placed this rating on CreditWatch with negative implications because XL and its core subsidiaries are on CreditWatch.

Each equity unit security consists of a stock-purchase contract and a beneficial interest in a senior note due in 2021, S&P noted, adding that the BBB rating is two notches below the A- counterparty credit rating on XL, which reflects the subordinated nature of the securities, the risk of deferral of interest payments and the market risk borne by investors under the share-purchase contract.

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