Moody’s assigns A3 to Aflac notes

Moody's Investors Service said it assigned an A3 debt rating to the ¥60 billion of 10-year fixed-rate senior unsecured notes issued by Aflac Inc. (senior debt at A3, stable outlook).

Proceeds are expected to be used for general corporate purposes, including to replenish cash used to repurchase the company's 6.9% senior notes due 2039 and 6.45% senior notes due 2040 in its recent tender offer.

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

Moody’s said this will have a very modest impact on Aflac's strong financial flexibility given that proforma adjusted financial leverage is expected to remain in the mid 20% range following the issuance. This debt issuance is mostly offset by the debt reduction from Aflac's December 2016 tender offer.

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

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