Fitch rates Old Mutual debt BBB+

Fitch Ratings said it assigned Old Mutual plc's proposed issue of subordinated notes an expected rating of BBB+.

The notes are expected to be sterling denominated and of benchmark size, Fitch said. Proceeds will be used as part of the financing for the proposed acquisition of the Swedish insurance group Skandia. In mid-December, Old Mutual announced that it had received acceptances for its offer representing 64.28% of Skandia shares and extended the offer period to Jan. 12.

The agency said it views the proposed Skandia transaction positively. If successful, the acquisition will result in a much more internationally diversified profile for the group, meeting one of the agency's key expectations, and Skandia provides a good strategic fit for Old Mutual in geographical mix and product focus.

However, as with any acquisition, there is execution risk but, given Skandia's limited overlap with Old Mutual's current operations, Fitch said the potential for integration risk is much reduced.

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