Credit rating agencies, A.M. Best Co., Standard & Poor's
Ratings Services (S&P) and Moody's Investor Services of
) have assigned debt ratings on the recently issued 5.75% senior
unsecured notes of
American Financial Group Inc.
). While A.M. Best assigned a rating of "bbb+" to the notes,
Moody's conferred a "Baa2" rating. Both agencies have a positive
outlook on the ratings.
Additionally, S&P has assigned a "BBB+" rating to the notes.
All other existing senior unsecured notes of American Financial
also hold a "BBB+" rating from S&P. Further, the rating agency
has assigned a counterpart credit rating of "BBB+" with a stable
outlook to the company.
S&P does not expect any change in the company's financial
leverage due to the issuance of these notes as these are being
issued to replace its 7.125% senior debenture worth $115 million,
due in 2034. However, as the interest rate on the new notes is
lower than the debentures, the interest coverage ratio is expected
American Financial announced the issue of the senior notes worth
$125 million last week. These are scheduled to mature on August 25,
2042. However, the company will allow the redemption of 100% of the
principal amount plus accrued and unpaid interest on these notes
from August 25, 2017.
American Financial is also expected to submit an application for
the listing of these unsecured senior notes on the New York Stock
Exchange. On receiving approval from the regulatory bodies, trading
should begin within 30 days after the issuance, with the "AFA"
The proceeds from this issue will be used to buy back the 7.125%
senior debenture. The redemption amount will not only include the
principal but also the interest accrued, excluding the date of
redemption. The residual proceeds will be used to finance the daily
operations of the American Financial and aid its working
American Financial currently carries a Zacks #3 Rank, which
implies a short-term Hold rating.
AMER FINL GROUP (AFG): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
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