Marsh & McLennan Issues $500M Notes - Analyst Blog


Marsh & McLennan Cos. Inc. ( MMC ) announced the pricing of senior unsecured notes worth $500 million in a two-part offering. The proceeds are expected to be utilized for enhancing business operations as well as to redeem $250 million of long-term notes that are due for maturity in 2015.

Accordingly, one part of the long-term notes are worth $250 million and are dated to mature in 2018. These five-year fixed rate notes bear an interest of 2.55%. The remaining tranche of $250 million notes are slated to mature in 2023. These ten-year fixed rate senior notes carry an interest of 4.05%.

Marsh & McLennan appointed BofA Merrill Lynch of Bank of America Corp. ( BAC ), Deutsche Bank Securities of Deutsche Bank AG ( DB ), Goldman, Sachs & Co. of Goldman Sachs Group Inc. ( GS ) and HSBC Holdings plc ( HBC ) as joint book-running managers for the offering. The company also appointed co-managers, which include Barclays Capital plc ( BCS ), JP Morgan Chase & Co. ( JPM ), Citigroup Inc. ( C ) and Morgan Stanley ( MS ).

Ratings Action

Meanwhile, Moody's Investor Service of Moody's Corp. ( MCO ) have casted a rating of "Baa2" to both the set of notes, with a positive outlook. Additionally, the ratings agency affirmed its ratings of "Baa2" and "P-2" rating on Marsh & McLennan's unsecured long-term debt and short-term debt, respectively.

While the ongoing slow pace of growth in the financials of Marsh & McLennan Given the low interest rate environment and sluggishness across the U.S. and European economies, growth in the financials of Marsh & McLennan continues to be slow.

Nevertheless, Moody's appreciate the company's financial flexibility. The optimism also derives from Marsh & McLennan's healthy and diverse business model and its strong global presence in over 100 countries.

Meanwhile, the latest notes issue to refinance existing notes will not have any material effect on the credit profile, thereby maintaining its debt-to-EBITDA ratio between 2.5x and 3.0x. Along with a healthy financial leverage, balance sheet and coverage ratios, a net profit margin of about 12% and adjusted operating margin of 19.4%, in the first half of 2013, the company showcases modest financial improvement, thereby paving the way for enhancing operating leverage.

While Marsh & McLennan carries a Zacks Rank #3 (Hold), Moody's carries a Zacks Rank #2 (Buy).

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MOODYS CORP (MCO): Free Stock Analysis Report

MARSH &MCLENNAN (MMC): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BAC , BCS , C , DB , GS

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