Fitch Assigns Old Mutual South Africa's Subordinated Debt 'AA(zaf)' Final Rating

Fitch Ratings has assigned Old Mutual Life Assurance Company South Africa's (OMLACSA) (Issuer Default Rating (IDR) of AAA(zaf)/Stable) issue of subordinated debt securities of ZAR1bn a final rating of 'AA(zaf)'.

The notes are rated two notches below OMLACSA's IDR of 'AAA(zaf)' to reflect their subordination and loss absorption features, in line with Fitch's notching criteria. The assignment of the final rating follows the completion of the bond issue and receipt of documents conforming to the information previously received.

The final rating is the same as the expected rating assigned on 21 November 2014. KEY RATING DRIVERS The securities have a 10-year maturity, callable after a period of five years and are issued in two tranches, one with a fixed and one with a floating coupon.

The ZAR700m floating notes pay coupons at a rate of 3m Jibar + 220bps on a quarterly basis and the ZAR300m of fixed notes pay a coupon of 9.255% semi-annually. Both issues have a step-up of 110bps after the first call date on 27 November 2019.

The scheduled maturity date is 27 November 2024. The notes include interest deferral features, which would be triggered on a breach (or potential breach on payment of interest) of the statutory solvency requirements. According to Fitch's methodology, this subordinated bond is classified as 100% capital due to regulatory override within Fitch's risk-based capital assessment and is classified as 100% debt for the agency's financial leverage calculations.

OMLACSA's financial leverage remains low for its rating category and interest coverage is expected to remain strong. RATING SENSITIVITIES The ratings on the subordinated debt securities are notched down from the issuer's rating and are therefore sensitive to changes in OMLACSA's National Long-term rating. Contact: Primary Analyst Anna Bender Associate Director +44 20 3530 1671 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com.




Source: Reuters