Fitch rates Friends Provident capital securities A-

Fitch Ratings said it assigned Friends Provident plc's issue of step-up tier one insurance capital securities (Stics) a final rating of A-.

The £500 million issue proceeds will be used partly to finance subordinated debt maturing in 2006, with the rest being used to fund growth. Fitch notes that any amount raised in excess of Friends Provident's current innovative tier one capacity will receive upper tier two credit.

The Stics are perpetual in nature but callable from 2015. If not called then, a step up of 100 basis points will apply. Coupons are mandatorily deferred in the event of a solvency breach, and Friends Provident further retains discretionary coupon deferral. Deferred coupons will be settled through stock settlement upon redemption.

The securities will be guaranteed by Friends Provident Life and Pensions Ltd., the main operating company. The issue will receive favorable equity credit (90%) in line with Fitch's treatment of hybrid debt instruments. As a result, equity-adjusted leverage is expected to decline, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.