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SCOR places $625mn deeply subordinated Tier 1 issuance

7th March 2018 - Author: Staff Writer

SCOR has placed an innovative perpetual $625 million deeply subordinated Tier 1 notes issue on the Regulation S USD market, and announced plans to use the issuance proceeds for general corporate purposes.

SCOR logoThe placement was made in “highly favourable conditions”, said SCOR, and is the first transaction for a restricted Tier 1 instrument with a principal write-down feature in USD, which provides the re/insurance group with the greatest financial flexibility and strongest quality of capital for a debt instrument.

Denis Kessler, Chairman & Chief Executive Officer (CEO) of SCOR, said: “The success of today’s USD placement, which was oversubscribed more than 4 times, bears witness to the quality and strength of SCOR’s credit worthiness.

“This placement, which is the strongest quality of capital for a debt instrument, enables us to secure attractive long-term financing and demonstrates the Group’s ability to pursue an active and innovative capital management policy.

“SCOR is proud to have completed this innovative placement on the Tier 1 USD market, which will optimize the Group’s financial structure and flexibility, and support its future organic growth.”

The French insurer and reinsurer has also confirmed plans to redeem the CHF 315 million and CHF 250 million undated subordinated note lines, callable in June 2018 and November 2018 respectively, using the proceeds of the new instrument.

The coupon for the new USD placement has been set at 5.25%, until the first call date of March 13th, 2029, and resets every 5 years thereafter at the prevailing 5-year U.S. Treasury yield plus 2.37%.

The notes were swapped into EUR for an 11-year period providing an effective yield cost to SCOR of 2.95%, corresponding to a 177 basis point spread over the 11-year EUR mid-swap rate, explains the re/insurer.

Settlement is expected to take place on March 13th, 2018, and the notes’ proceeds are expected to be eligible for inclusion in SCOR’s Tier 1 regulatory capital, in accordance with applicable rules and regulatory standards, and as equity credit in the rating agency capital models.

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