Best Assigns Novae Bonds ‘bb+’ Rating; Affirms Novae Holdings Ratings

April 26, 2007

A.M. Best Co. has assigned an indicative debt rating of “bb+” to the forthcoming £100 million ($200 million) floating rate subordinated bonds to be issued by the UK-based Novae Group plc, with a positive outlook. Best also affirmed Novae’s issuer credit rating (ICR) of “bbb-” of Novae Holding (NH), noting that it is the “ultimate non-operating holding company of the Novae group of companies.

Similarly, Best affirmed the debt rating of “bbb-” on Novae’s £50 million ($100 million) convertible bonds due 2008, and its ICR of “bb+” on Novae Holdings Plc (NH), the debt ratings of “bb+” on the $15 million and $10 million floating notes and “bb” on the $11 million subordinated floating notes, all due in 2034 and issued by NH.

“The outlook for all these ratings has been revised to positive from stable, in line with the outlook on Lloyd’s Syndicate 2007 (managed by Novae Syndicates Limited),” said Best.

The proceeds of this issue will be used to refinance Novae’s convertible bond (due 2008), refinance NH’s existing loan notes at a lower cost and replace a letter of credit that is used to support Lloyd’s Syndicate 2007 and held as funds at Lloyd’s.

Financial and debt leverage ratios remain within A.M. Best tolerance levels. The bond is to have a 10-year duration with a five-year call option held by the issuer. The proceeds have some equity characteristics for which A.M. Best will give partial credit in its quantitative analysis of Novae.

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