Fitch Ratings has assigned Munich Re’s (‘AA-‘ /Stable) expected issue of hybrid securities in benchmark size an expected ‘A(exp)’ rating. The final rating is contingent on the receipt of final documents conforming to information already received.
The issue is part of Munich Re’s active capital management and takes into account the refinancing of the company’s current outstanding bonds. The transaction involved the partial buyback of Munich Re’s outstanding EUR2.9bn hybrid bond at 6.750% coupon, callable 21 June 2013 with a maturity date of 21 June 2023. Due to the simultaneous buy-back of outstanding subordinated debt the issue is expected to either not affect or only slightly increase Munich Re’s financial debt. In any case, Munich Re’s leverage ratios remain well within the range of the group’s rating level.
The new issue will first be callable in June 2021 with a final maturity date in 2041. The notes are subordinated to senior creditors. The securities pay a fixed annual coupon for 10 years, at which time there is a step-up of 100bps and the coupon pays on a floating-rate quarterly basis. The hybrid has been prepared for Tier 2 own funds eligibility according to the latest guidance from the QIS-5 Technical Specifications under the Solvency II regime.
Source : Fitch Ratings Press release
