Fitch Ratings has today assigned ELM BV's £478m (EUR700m) step-up perpetual fixed-to-floating notes a rating of 'BBB'. Under Fitch's criteria for treatment of hybrids, the securities will receive 50% equity credit.
The notes have been issued to finance loan notes of equal amount to Swiss Life Insurance and Pension Company. Swiss Life is rated Insurer Financial Strength 'A-' (A minus) and Issuer Default 'BBB+' with Stable Outlook.
The notes have been secured against subordinated perpetual fixed-to-floating rate loan notes issued by Swiss Life and guaranteed by Swiss Life Holding. The notes issued by repackaging vehicle ELM B.V. have been rated on a look-through basis to the financial strength of Swiss Life and taking into consideration the characteristics of the securities.
Funds raised by the debt issue are expected to be used by Swiss Life for general corporate purposes, including the retirement of existing debt.
Coupons are initially paid annually in arrears based on a fixed rate of 5.849%. A floating rate of 2.5% per annum above the three-month EURIBOR will apply after the first call-date in April 2017. Based on Fitch's calculations, the transaction will not materially affect the insurer's leverage and is within interest coverage capability.
