In a concerted effort to fortify its long term financials and
refinance an earlier debt,
Fidelity National Financial, Inc.
), is issuing notes worth $400 million. The company, on August 21,
announced the pricing of the notes which bear an interest rate of
5.50% and are scheduled to mature on September 1, 2022.
The notes being priced at 99.513 are slated to yield an interest
rate of 5.564%. Starting March 1, 2013, these notes are scheduled
to pay interest twice a year, on March 1 and September 1.
As mentioned earlier, the proceeds from this issue will be used
to pay back Fidelity National Financial's previous 5.25% senior
unsecured notes worth $236.5 million, scheduled to mature in March
2013. Also, it will cushion the capital requirement for the daily
operations of the company and will do away with all debt repayments
until May 2017.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, the
financial management and advisory unit of
Bank of America Corporation
), Barclays Capital Inc., an operating unit of
), J.P. Morgan Securities LLC, the investment research unit of
JPMorgan Chase & Co.
), and Wells Fargo Securities, LLC, a unit of
WELLS FARGO & COMPANY
), are the joint bookrunning managers for the sale of these
Jefferies & Company, Inc., of
Jefferies Group, Inc.
), Stephens Inc., Dowling & Partners Securities, LLC and Keefe,
Bruyette & Woods, Inc. will be the co-managers for the
Over the years, Fidelity National Financial has maintained a
sound financial position. It has reduced its total debt amount from
time to time and worked towards improving its cash position.
However, we believe the company should put in more effort to do
away with refinancing of debt by issuing senior notes as this will
allow it to focus more on its business and deploy cash raised from
such issues into its core operations.
Shares of Fidelity National Financial lost almost 2% since
Tuesday to close at $18.51 yesterday.
According to Reuters, Moody's Investor Service of
), has conferred a rating of Baa3 to the senior unsecured notes
issued by Fidelity National Financial. Another credit rating
agency, Fitch Ratings has also assigned a 'BB+' to these notes with
a stable outlook.
Stewart Information Services Corporation
), which competes with the company on the same lines, has also
received a similar debt rating of 'BB+' from Fitch with a stable
outlook. Both Fidelity National Financial and Stewart Information
retain a Zacks #1 Rank, which translates into a short-term Strong
BANK OF AMER CP (BAC): Free Stock Analysis
BARCLAY PLC-ADR (BCS): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
JEFFERIES GP-NW (JEF): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
STEWART INFO SV (STC): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.