S&P rates QBE convertibles A

Standard & Poor's said it assigned an A rating on the $850 million 20-year zero-coupon senior convertible securities issued by QBE Funding Trust V. QBE Funding Trust V is a special purpose entity established for the issuance of these securities. The issue rating is supported by a guarantee from QBE Insurance Group Ltd. and QBE International Holdings (U.K.) plc.

The proceeds will be used to refinance existing debt at a lower cost and for general purposes, the agency said.

The rating on QBE group, the holding company, is one notch lower than the core operating company rating of A+, reflecting its structural subordination to the policy holders of QBE's operating companies, S&P said.

While the securities are a senior debt issue at this stage, they can be converted under certain circumstances to QBE ordinary shares, the agency said.

QBE Group's debt leverage increases as a result of this debt issue, but remains within tolerance for the A rating, S&P said.

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