Moody’s gives Aflac notes A3

Moody’s Investors Service said it assigned an A3 debt rating to the ¥38 billion, fixed-rate senior unsecured multi-tranche notes offered by Aflac Inc. The proceeds are expected to be used to redeem all or a portion of Aflac’s $350 million 4% senior notes due 2022 and for general corporate purposes. The outlook on Aflac and its subsidiaries is stable.

“Aflac’s A3 senior debt rating reflects the company’s excellent franchise and strong market position in supplemental health in both the U.S. and Japan. Aflac’s excellent financial profile, supported by strong profitability, liquidity and coverage of interest expense, is partially offset by the company’s limited product diversification and somewhat concentrated investment portfolio,” Moody’s said in a press release.

The agency said the debt offering will have minimal effect on Aflac’s strong financial flexibility given the redemption of the 2022 notes and pro forma adjusted financial leverage is expected to stay in the low 20% range. Aflac’s earnings coverage is expected to remain strong at over 12 times.

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