Moody’s rates Aflac notes A3

Moody's Investors Service said it assigned an A3 debt rating with a stable outlook to the $1 billion of five- and 10-year fixed-rate senior unsecured notes issued by Aflac, Inc. (senior debt at A3, stable).

Proceeds are expected to be used to fund the full redemption of $850 million of 8.5% senior notes due 2019, any applicable make-whole premium and for general corporate purposes. The debt offering is a drawdown from a shelf registration filed in May 2012.

"Aflac is taking advantage of attractively low interest rates to refinance its outstanding higher coupon debt. This will have a modest impact on Aflac's strong financial flexibility given that proforma adjusted financial leverage is expected to be approximately 24% following the redemption," Moody's assistant vice president and analyst Shachar Gonen said in a news release.

The lower weighted average coupon will reduce interest expense prospectively, thereby improving Aflac's strong earnings coverage to over 14 times.

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