Bermuda-based PartnerRe Ltd. has announced that it intends to issue, through its indirectly wholly-owned subsidiary PartnerRe Finance A LLC, $250 million of 10-year fixed rate 6.875 percent Senior Notes, pursuant to its currently effective shelf registration statement. PartnerRe Ltd. will fully and unconditionally guarantee the Senior Notes.
PartnerRe said it “intends to use a portion of the proceeds from the offering to repay all of the $220 million of third-party bank debt owed by PartnerRe U.S. Holdings Corporation, due in December 2008. Any remaining proceeds will be used for general corporate purposes.”
The rating agencies have given the new debt issue a generally favorable rating. Standard & Poor’s Ratings Services assigned its ‘A’ senior debt rating to the notes. Fitch Ratings assigned them an ‘A+’ rating, and A.M. Best assigned a debt rating of “a-“; to the notes.
S&P also affirmed its current ‘A’ counterparty credit rating on PartnerRe, and its ‘AA-‘ counterparty credit and financial strength ratings on the Group’s operating subsidiaries, all with stable outlooks.
Fitch noted that “PartnerRe’s pro forma equity-credited adjusted leverage was 8 percent at March 31, 2008, and could rise to roughly 12 percent following this issuance.”; However, Fitch added that it “views this as an acceptable level of financial leverage, considering PartnerRe’s exposure to low frequency, high severity losses. Moreover, Fitch expects that PartnerRe’s financial leverage could decline after the company pays down its senior notes maturing in December 2008.”;
Best said its rating “reflects PartnerRe’s excellent business profile, strong risk-adjusted capitalization and strong enterprise risk management practices. Somewhat offsetting these strengths are PartnerRe’s exposure to large losses and moderately elevated financial leverage relative to current ratings. As of March 31, 2008, PartnerRe’s unadjusted total debt, preferred and hybrid securities approximated 26.1 percent prior to the partial equity credit provided under A.M. Best’s debt rating criteria.”;
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