S&P: QBE Insurance notes BBB-

S&P said assigned the long-term issue credit rating of BBB- to the £327 million fixed-rate reset guaranteed exchangeable subordinated callable notes to be issued by QBE Insurance Group Ltd. under its recently established $4 billion medium-term note program.

The proceeds will be used to replace existing subordinated debt.

The notes are scheduled to mature May 24, 2042 and will initially bear 6.115% per year interest, which is payable semi-annually in arrears, S&P said.

Their interest rate will then be reset on May 24, 2022, May 24, 2027, May 24, 2032, and May 24, 2037 to a rate calculated by reference to the then midmarket swap rate, plus a margin of 5% per year, the agency said.

The issuer has the option to redeem these notes at face value on each interest rate reset date and for certain tax and regulatory events, as well as to defer payment of interest in certain circumstances, which will not constitute an event of default, S&P said.

The agency said it rated the issue three notches below the company’s A- issuer credit rating.

The BBB- rating reflects the additional risk arising from its subordination to higher ranking securities and creditors, option of deferability of the interest payments and a non-viability conversion clause contained in its terms and conditions, S&P said.

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