S&P rates AMP notes BB+

S&P said it has assigned its BB+ long-term issue credit rating to AMP Ltd.’s proposed A$275 million capital notes 2 issue. AMP plans to issue the notes on Dec. 23, as part of AMP group’s ongoing funding and capital management strategy, including funding the additional tier 1 capital of one or more regulated entities.

The notes will be perpetual, convertible, subordinated, and unsecured, feature a scheduled mandatory conversion date of Dec. 16, 2027, subject to certain conditions being met, and are issued with a six-year call date.

“We rate the notes three notches below the BBB+ issuer credit rating on AMP. As the ultimate nonoperating holding company for AMP group, the ratings on AMP Ltd. are one notch below the group credit profile of a- due to the reliance on distributions from its operating companies to meet its financial obligations. The BB+ rating on the proposed capital notes reflects the added risk arising from the subordination to higher ranking securities and creditors, nonviability contingent capital terms and deferability of interest payments,” said S&P in a press release.

Proceeds are expected to be used to redeem the company’s A$275 million AMP wholesale notes on March 27. We also anticipate the proceeds will be initially used to support the regulatory capital positions of AMP Bank Ltd. and AMP Life Ltd.

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