Fitch gives BBB to AXIS Specialty notes

Fitch Ratings said it assigned a BBB rating to the $350 million 10-year 4% senior unsecured notes issued by AXIS Specialty Finance plc.

The ratings are one notch below the ratings on currently outstanding senior unsecured notes from AXIS Capital Holdings and AXIS Specialty Finance.

The notes are fully and unconditionally guaranteed by AXIS Capital Holdings Ltd., the ultimate parent of AXIS Specialty.

Proceeds are expected to be used to prefund senior unsecured notes maturing in April 2019 and for general corporate purposes. Management intends to seek Tier 3 capital treatment from regulators for the new notes.

“Fitch rates the new notes one notch lower than currently outstanding senior unsecured notes due to risk they could be treated as subordinated debt in the case of default.,” the agency said in a news release.

“Specifically, language in AXIS Specialty Finance's prospectus that says in the event of insolvency the new notes may recover less, ratably, than holders of series of the currently outstanding senior notes. Thus, Fitch is treating the new notes as subordinated debt under its notching criteria.”

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