Moody’s applies A3 to Aflac notes

Moody's Investors Service said it assigned an A3 debt rating to the $700 million of 10-year and 30-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 $650 million of five-year 2.65% senior notes due February 2017 and for general corporate purposes.

The debt offering is a drawdown from a shelf registration filed in May 2015.

Moody's said Aflac is taking advantage of low interest rates to refinance its upcoming debt maturity. This will have a very modest impact on Aflac's strong financial flexibility given that proforma adjusted financial leverage is expected to be about 25% following the redemption, the agency added.

Prospectively, the low coupon will help keep interest expense modest and Aflac's earnings coverage strong at over 13 times.

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