LONDON, Oct 10 (IFR) - CNP Assurances could become the first
European insurer to issue a new type of subordinated bond in
euros in order to fortify its capital base, according to a
Several sources have also indicated a French insurer was
considering a so-called Tier 3 transaction.
Insurers have been mulling Tier 3 issuance as a
cost-efficient way to boost their regulatory capital. Because it
would rank senior to Tier 2 in a liquidation, the assumption is
it would be cheaper to sell.
CNP Assurances said in an August credit investor
presentation it had significant subordinated debt issuance
capacity as of June 30, including 2.3bn of Tier 2 and 2bn of
BNP Paribas, Bank of America Merrill Lynch, Citigroup,
Credit Agricole and Nomura are expected to be at the helm of
CNP's potential trade.
It would be the first Tier 3 bond issued by a European
insurer in euros, though Aviva priced a C$450m Tier 3 deal in
New European regulation known as Solvency 2 allows insurers
to cover up to 15% of their Solvency Capital Requirement in Tier
3 instruments. Aviva's Tier 3 bond improved its Solvency 2 ratio
by around two percentage points to an approximate 182%,
according to Moody's.
CNP Assurances is rated A (stable) by S&P. It was last in
the market in December 2015 when it sold a 750m June 2047
callable June 2027 at 360bp over mid-swaps. That bond was quoted
at 374bp over swaps on Monday, according to Thomson Reuters.
One lead manager declined to comment. CNP Assurances and the
other banks did not reply to IFR's requests for comment.
(Reporting by Alice Gledhill, editing by Helene Durand, Alex
Chambers, Julian Baker)