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Fitch Rates Old Mutual plc's Subordinated Debt 'BB+'
November 3, 2015 / 9:58 AM / 2 years ago

Fitch Rates Old Mutual plc's Subordinated Debt 'BB+'

(The following statement was released by the rating agency) LONDON, November 03 (Fitch) Fitch Ratings has assigned Old Mutual plc's GBP450m issue of subordinated debt securities a 'BB+' rating. The notes are rated three notches below Old Mutual's Issuer Default Rating (IDR) of 'BBB+', to reflect their subordination (two notches) and moderate risk of non-performance (one notch), in line with Fitch's notching criteria. KEY RATING DRIVERS The securities have a 10-year bullet maturity and pay a 7.875% fixed coupon semi-annually. Fixed-charge coverage is expected to remain solid given Old Mutual's strong track record of earnings generation. The notes include a mandatory interest deferral feature, which is triggered when the company's capital level falls below the regulatory capital requirement. The subordinated bonds have been structured to qualify as Tier 2 capital under Solvency II. According to Fitch's methodology, these subordinated bonds are classified as 100% capital within Fitch's own capital assessment due to regulatory override and are classified as 100% debt for the agency's financial leverage calculations as the instruments are dated. The proceeds of the issuance of the new subordinated debt securities will be partly used to replace the EUR373m Tier 2 debt which has recently been called. The proceeds are also expected to be used to pay maturing senior debt in 2016. The issuance of the new subordinated debt does not have a material impact on Old Mutual's leverage, which is expected to remain low for Old Mutual's rating. RATING SENSITIVITIES The ratings on the subordinated debt securities are sensitive to changes in Old Mutual's IDR. Contact: Primary Analyst Ekaterina Ishchenko Analyst +44 20 3530 1532 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Federico Faccio Senior Director +44 20 3530 1394 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 16 Sep 2015) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=993344 Solicitation Status here Endorsement Policy here ail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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