XL Group Ltd., the wholly owned subsidiary of XL Group plc. (XL) has priced its public offer of 5.75% senior notes worth $400 million due 2021.
XL Group expects net proceeds from this issuance to be $396.4 million. The company intends to use the net proceeds to repay $600 million 6.5% Guaranteed Senior Notes due 2012 of XL Capital Finance (Europe) plc, another wholly owned subsidiary of XL Group.
Standard & Poor's Ratings Services have assigned a 'BBB+' rating with a stable outlook for the notes. Another credit rating agency, Fitch Ratings assigned a 'BBB' rating for the notes.
XL Group ended the second quarter of 2011 with notes payable and debt balance of $2.461 billion, a trifle lower than $2.464 billion at the end of 2010. The debt-to-capital ratio was 20.36% at second-quarter 2011 end, lower than 20.41% at the end of 2011. The issuance of $400 million of debt will increase the debt-to-capital ratio by 250 basis points.
The company incurred interest expenses of $55.1 million in the second quarter, an increase of 12.1% year over year. With the new debt issuance, the company will have to annually dish out an additional $23 million.
We retain our Neutral rating on XL Group. The quantitative Zacks #2 Rank (short term Buy rating) for the company indicates upward pressure on the stock over the near term.
Based in Dublin, Ireland, XL Group is a leading global provider of insurance, reinsurance and financial risk solutions to enterprises and insurance companies. It competes with ACE Limited (ACE).
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XL GROUP PLC (XL): Free Stock Analysis Report
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