Aegon recalculates coupon for $500 million perpetuals without Libor

By William Gullotti

Buffalo, N.Y., July 17 – Aegon NV updated the coupon rate for its $500 million perpetual capital securities (ISIN: NL0000116168) after the cessation of Libor, according to a 6-K filing with the Securities and Exchange Commission.

As previously reported, the company previously held and subsequently terminated a consent bid in April to officially migrate the interest basis for the perpetuals to the 10-year SOFR ICE swap rate since the terms of the securities lacked a fallback rate.

Per the company announcement appended to the filing, Aegon was unable to determine the 10-year USD Libor ICE swap rate or obtain the 10-year USD Libor swap rate quotations required to calculate an alternative comparable swap rate. The resulting coupon rate was then determined in accordance with the provisions described in conditions 5(c) and 5(e) of the terms and conditions of the securities.

The trustee determined therefore the coupon rate for the next coupon period on the basis of the USD SOFR spread-adjusted ICE swap rate as published by ICE Benchmark Administration, which is in line with the methodology suggested by the Alternative Reference Rates Committee (ARRC) in its white paper.

The resulting coupon rate of 3.93894% will be applicable to the coupon period that begins on July 15, 2023 and ends on Oct. 15, 2023.

The aforementioned rate is the aggregate of (i) the 10-year USD SOFR ICE swap rate as of July 13, 2023, (ii) a spread adjustment of 28.694 basis points and (iii) a credit spread of 10 bps. The spread adjustment is based on the fallback formula proposed by the ARRC, and the aggregate of (i) and (ii) is equal to the USD SOFR spread-adjusted ICE swap rate.

The series was issued July 15, 2004.

The financial services company is based in The Hague.

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