Last week, Fitch Ratings assigned a debt rating of “BBB+” on the recently issued 5.75% senior unsecured notes of American Financial Group Inc. (AFG), according to Reuters. Concurrently, the rating agency affirmed its Issuer Default Rating (IDR) of “A-” on the umbrella company and the debt rating on its various outstanding senior notes at “BBB+”.
Fitch also affirmed the IDR of American Financial’s operating subsidiaries at “A+”. The rating agency holds a stable outlook for all these ratings.
The Fitch ratings follow similar action by A.M. Best Co., Standard & Poor’s Ratings Services (S&P) and Moody’s Investor Services of Moody's Corp. (MCO) earlier. While A.M. Best assigned a rating of “bbb+” on the notes, Moody’s conferred a “Baa2” rating. Both agencies have a positive outlook on the ratings.
Additionally, S&P assigned a “BBB+” rating on the notes. All other existing senior unsecured notes of American Financial also carry a “BBB+” rating from S&P. Further, the rating agency assigned a counterpart credit rating of “BBB+” with a stable outlook on the company.
American Financial announced the issue of the senior notes worth $125 million in August. These notes are scheduled to mature on August 25, 2042. However, the company will allow the redemption of 100% of the principal amount plus accrued and unpaid interest on these notes from August 25, 2017.
American Financial is also expected to submit an application for the listing of these unsecured senior notes on the New York Stock Exchange. On receiving approval from the regulatory bodies, trading should begin within 30 days after the issuance, with the “AFA” symbol.
The proceeds from this issue will be used to buy back American Financial’s outstanding 7.125% senior debenture due 2034. Last week, the company announced its intention to redeem the debentures worth $115 million. The debentures, which are listed on the New York Stock Exchange under the trading symbol “AFE”, will be redeemed on September 28, 2012. The redemption amount will include the principal as well as the accrued interest. The residual proceeds will be used to finance the daily operations of the American Financial and aid its working capital.
American Financial currently carries a Zacks #3 Rank, which implies a short-term Hold rating.
AMER FINL GROUP (AFG): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
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