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Sun Life Financial (SLF) to Offer Subordinated Debentures

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Sun Life Financial Inc.SLF announced that it will issue up to $500 million 2.60% subordinated unsecured fixed/floating Debentures in Canada. These debentures are scheduled to mature in 2025. The offer will be closed on Sep 25, 2015.

Sun Life Financial intends to deploy the net proceeds from the issuance to partially fund its previously declared acquisition of Assurant Inc.'s AIZ employee benefits business. The remaining proceeds, if any, will be used for general corporate purposes including investments to subsidiaries.

Sun Life Financial has displayed its prudence by procuring funds from the market by issuing Debentures while the interest rate is still low. By capitalizing on the low interest rate environment, the company is lowering the interest burden and thereby facilitating margin expansion.

However, with the new issuance both leverage and interest expenses are likely to increase. At the end of second-quarter 2015, the total debt-to-capital ratio for Sun Life was 20%, improving 100 basis points over 2014 -end level. Nonetheless, the latest issuance will likely increase the leverage by 150 basis points. Moreover, interest expenses, which improved during the first half of 2015, will also see an increase.

Nonetheless, Sun Life Financial's sturdy financial position and solid operational performance help it to generate enough funds to service debt uninterruptedly.

Currently, Sun Life Financial carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the life insurance space are Primerica, Inc. PRI and StanCorp Financial Group Inc. SFG . Both these stocks sport a Zacks Rank #2 (Buy).

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ASSURANT INC (AIZ): Free Stock Analysis Report

STANCORP FNL CP (SFG): Free Stock Analysis Report

PRIMERICA INC (PRI): Free Stock Analysis Report

SUN LIFE FINL (SLF): 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 Nasdaq, Inc.


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

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