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Arch Capital raising $1bn with senior debt issuance

25th June 2020 - Author: Charlie Wood

Bermuda-based re/insurer Arch Capital Group has priced $1 billion of 3.635% senior notes as it looks to raise funds for general corporate purposes.

ArchThis move effectively sees Arch join a number of other companies looking to capitalise on a firming re/insurance marketplace.

For Arch, raising capital could be considered important following the challenges it’s faced post-pandemic in securing new mortgage reinsurance from the capital markets.

As a result, this capital boost will be beneficial to its solvency metrics at this time.

The offering is expected to close on June 30, 2020, subject to customary closing conditions.

It is being led by Wells Fargo Securities, LLC, as sole structuring agent and joint book-running manager, and BofA Securities, Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Lloyds Securities Inc., as joint book-running managers.

Fitch Ratings has assigned a ‘BBB+’ rating to Arch Capital’s Senior Notes. The new issuance ranks equally with Arch’s currently outstanding senior notes and is thus rated equivalently.

The new securities are expected to qualify as Tier 3 regulatory capital by the Bermuda Monetary Authority (BMA).

The ratings remain sensitive to any material change in Fitch’s rating case assumptions with respect to the coronavirus pandemic.

Periodic updates to Fitch’s assumptions are possible given the rapid pace of changes in government actions in response to the pandemic, and the pace with which new information is available on the medical aspects of the outbreak.

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