Moody's assigns rating Baa2 to January 7 senior bond issue
09 January 2014 - 19:56 price sensitive
Trieste. Generali announced that Moody’s, the rating agency, assigned a Baa2 Rating to the senior bond issue closed on January 7, 2014.
Please find attached the original Moody’s press release.
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Rating Action: Moody's assigns Baa2 rating, negative outlook, to the EUR1.25bn senior notes issued by Assicurazioni Generali
Global Credit Research - 09 Jan 2014
London, 09 January 2014 -- Moody's Investors Service has assigned a Baa2 rating to the EUR1.25 billion Senior Notes issued by Assicurazioni Generali S.p.A (Generali, Baa1 insurance financial strength rating, negative outlook). The outlook is negative in line with Generali's insurance financial strength rating (IFSR).
RATINGS RATIONALE
Generali's Baa2 senior debt rating is one notch lower than its Baa1 financial strength rating. This notching reflects
- both the holding and internal reinsurer role of the holding company,
- the cash flows available at the holding company which is expected to cover interests at around 2.0x, in line with a Baa rating category, and
- the benefits from the geographically diversified sources of dividends originated outside Italy, mainly from Germany, France and CEE.
The proceeds from this issuance, issued with a coupon of 2.875%, will be used to partially refinance the EUR2.25 billion senior debts maturing in 2014. We expect the group's financial leverage (29.5% at YE2012) to reduce in the medium-term as the company has embarked on a strategy to reduce part of their outstanding debt using some proceeds from planned disposals. Management recently stated that €750 million of senior debt due to mature in 2014 will be repaid by internal resources.
Moody's considers Generali's overall financial flexibility to be good although fixed charge coverage remains somewhat constrained. Fixed charge coverage declined to 2.9x at year-end 2012 (when including pension deficit interest) from 3.4x in 2011 following the decline in bottom line in 2012. We expect fixed charge coverage to improve as a result of improving profitability and the aforementioned deleveraging.
The negative outlook mirrors the negative outlook on Italy's Baa2 government bond rating and reflects the uncertainties around the economic and financial environment in Italy, the insurer's domestic market. Any further downgrade of Italy would likely lead to a downgrade of Generali's ratings due to various linkages. These linkages include the reduced quality of the group's investment portfolio, Moody's view that the financial and economic environment in Italy will constrain profitability from Generali's Italian life insurance business, as well as the potential for further deterioration in other aspects of the insurer's investment portfolio should conditions in Italy decline further. In addition a deterioration in the cash flows at the holding, for example with a significant reduction in the cash flow coverage (i.e. below 2x) and /or a significant reduction on the cash flows from the (re)insurance business, may put downward pressure on the debt ratings.
The following rating has been assigned with a negative outlook:
Assicurazioni Generali S.p.A - EUR 1,250 million dated senior notes Baa2
PRINCIPAL METHODOLOGIES
The principal methodology used in this rating were Global Life Insurers published in December 2013, and Global Property and Casualty Insurers published in December 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Antonello Aquino
Senior Vice President
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Simon Harris
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454