(Repeat for additional subscribers)
May 30 (The following statement was released by the rating agency)
Fitch Ratings has assigned Poste Vita's
(BBB+/Stable) EUR750m subordinated debt issue a final 'BBB' rating.
KEY RATING DRIVERS
The subordinated notes are rated one notch below Poste Vita's Issuer Default
Rating of 'BBB+', in accordance with Fitch's notching methodology, to reflect
their subordination to senior obligations (including policyholders' liabilities)
and the lack of interest deferral features (ie non-payment of a coupon would
constitute a default). The notes have a five-year term and pay a fixed rate of
interest of 2.875% per annum.
Poste Vita is using the proceeds to fund its expected growth and to reduce
financial dependence on its parent company, Poste Italiane (Poste; BBB+/Stable).
Poste has enhanced Poste Vita's capital position through inter-company
subordinated loans (EUR540m) and capital injections in July 2013 (EUR200m) and
December 2013 (EUR150m).
The issue is expected to be classified as Tier 2 notes for regulatory purposes
and therefore receives 100% capital credit in Fitch's analysis of Poste Vita's
capital adequacy. It would have increased Poste Vita's regulatory solvency
margin on a pro-forma basis to around 140% from 122% at end-2013 (based on
consolidated accounts). However, Fitch expects Poste Vita to manage capital at
around 1.2x minimum regulatory requirements as the company grows its business.
As the agency treats the notes as 100% debt in its leverage assessment,
Fitch-calculated financial leverage would have increased to 34% (on a pro-forma
basis) from 17% at end-2013, but still remains in line with the rating level. .
Fixed-charge coverage would reduce as interest expenses increase, albeit
remaining strong for the current rating.
Any change in the rating of Poste Vita is likely to result in a corresponding
change in the rating of the subordinated debt.