French reinsurer SCOR has successfully placed a perpetual deeply subordinated notes issue on the Regulation S USD market in the amount of USD 625 million. This is the first transaction for a restricted Tier 1 instrument with a principal write-down feature in USD, which provides the Group with the greatest financial flexibility and strongest quality of capital for a debt instrument.
SCOR intends to use the proceeds of the issuance for general corporate purposes. SCOR also confirms its current intention, subject to market conditions and regulatory approval, to redeem the CHF 315 million and CHF 250 million undated subordinated note lines, callable in June 2018 and November 2018 respectively, using the proceeds of the new instrument.
The coupon for this new USD placement has been set at 5.25%, until the first call date of March 13, 2029, and resets every 5 years thereafter at the prevailing 5-year U.S. Treasury yield plus 2.37% (no step-up).
The notes were swapped into EUR for an 11-year period providing an effective yield cost to SCOR of 2.95%, corresponding to a 177 basis point spread over the 11-year EUR mid-swap rate.
Settlement is expected to take place on March 13, 2018. The proceeds from the notes are expected to be eligible for inclusion in SCOR's Tier 1 regulatory capital, in accordance with applicable rules and regulatory standards, and as equity credit in the rating agency capital models.