Fitch rates Phoenix notes BBB-

Fitch Ratings said it assigned a BBB- rating to Phoenix Group Holdings' $500 million dated subordinated tier 2 notes.

The notes are rated three notches below Phoenix's issuer default rating of A-, comprising two notches for expected recovery and one for moderate non-performance risk, Fitch said.

The notes were issued by Phoenix under its £3 billion euro medium-term note program.

Proceeds are being used to repay existing senior bank debt, the agency said.

The notes were issued with a fixed coupon of 5.375% with a maturity of 10 years.

The notes rank pari passu with Phoenix's other dated subordinated tier 2 notes and junior to Phoenix's subordinated tier 3 notes and unsecured unsubordinated obligations, Fitch explained.

The level of subordination is reflected in the agency's "poor" baseline recovery assumption for the issue.

Fitch said it views the issue as neutral to Phoenix's financial debt leverage and positive to capital adequacy as the new subordinated notes are replacing existing senior bank debt.

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