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Ageas confirms positive impact of changes in hybrid debt composition
21 March 2013
Ageas welcomes changes in its hybrid debt composition and their positive impact towards resolution of certain legacy issues.
Background hybrid debt
Ageas Hybrid Financing S.A. ("AHF"), a financing vehicle owned by Ageas SA/NV, issued
EUR 500 million 5.125% perpetual securities in 2006 (the "Hybrone securities"),
USD 750 million 8.25% perpetual securities in 2008 (the "NITSH I securities"), and
EUR 625 million 8% perpetual securities in 2008 (the "NITSH II securities"),
each supported and guaranteed on a subordinated basis by ageas SA/NV (formerly Fortis N.V. and Fortis SA/NV).
Successful placement of new hybrid debt by AG Insurance
AG Insurance SA/NV ("AGI"), a 75% subsidiary of ageas SA/NV, successfully placed and issued new perpetual subordinated notes on 21 March 2013 in an amount of USD 550 million at an interest rate of 6.75%, to be reset every 6 years from the date of issue.
AGI will use the proceeds of the new perpetual subordinated notes to (i) call the EUR 250 million NITSH II on-loan from AHF and (ii) redeem EUR 163.6 million nominal (at 91% of par value) of the Hybrone on-loan from AHF.
AHF to call all NITSH II securities at first call date
The call notice on the EUR 250 million NITSH II on-loan that AGI sent to AHF, combined with a call notice on the EUR 375 million NITSH II on-loan received from BNP Paribas Fortis SA/NV (formerly Fortis Bank SA/NV) ("BNP Paribas Fortis"), allows AHF in turn to notify the holders of the NITSH II securities of its call and redemption of all the NITSH II securities outstanding at their first call date on 3 June 2013.
AHF accepted all tendered Hybrone securities
Due to the early redemption by AGI of EUR 163.6 million of the EUR 500 million Hybrone on-loan, AHF was also able to accept all tendered Hybrone securities through the tender offer launched by AHF on 6 March 2013. The cash tender offer was executed at a purchase price of 91.0% of the nominal amount of the Hybrone securities. The capital gain on this transaction will be recorded by AGI in the first quarter of 2013. After the settlement of the tender offer, EUR 336.4 million of the Hybrone securities will remain outstanding.
Ageas welcomes the newly issued hybrid debt by AG Insurance as well as the tender offer and call by AHF for various reasons:
The credit exposure to BNP Paribas Fortis reduces
As result of the break-up of Fortis in 2009, AHF has a EUR 375 million and USD 750 million credit exposure in subordinated format to BNP Paribas Fortis. The call by BNP Paribas Fortis of the EUR 375 million on-loan reduces Ageas' credit exposure to BNP Paribas Fortis.
AHF continues to have a USD 750 million subordinated exposure to BNP Paribas Fortis as a result of the on-lending by AHF of the proceeds of the NITSH I securities. These securities have a first call date on 27 August 2013. AHF will confirm the status of this exposure to the market in due course while notifying the holders of the NITSH I securities of its intentions with regard to a potential call of the NITSH I securities.
The guarantees granted on AHF hybrid debt reduce
The guarantees granted by Ageas on the AHF hybrid debt reduce significantly.
Lower financing costs
The new hybrid perpetual subordinated notes issued by AG Insurance carry an interest rate of 6.75%, lower than the 8% rate that was applicable on the NITSH II securities.
Increased transparency
The replacement of hybrid securities issued by AHF with mixed exposure to AG Insurance and BNP Paribas Fortis by hybrid securities directly issued by AG Insurance creates greater transparency.
Hybrid capital will likely be more Solvency II compliant
The new subordinated perpetual notes issued by AG Insurance are expected to be Solvency II compliant.
Ageas confirms positive impact of changes in hybrid debt composition
21 March 2013
Ageas welcomes changes in its hybrid debt composition and their positive impact towards resolution of certain legacy issues.
Background hybrid debt
Ageas Hybrid Financing S.A. ("AHF"), a financing vehicle owned by Ageas SA/NV, issued
EUR 500 million 5.125% perpetual securities in 2006 (the "Hybrone securities"),
USD 750 million 8.25% perpetual securities in 2008 (the "NITSH I securities"), and
EUR 625 million 8% perpetual securities in 2008 (the "NITSH II securities"),
each supported and guaranteed on a subordinated basis by ageas SA/NV (formerly Fortis N.V. and Fortis SA/NV).
Successful placement of new hybrid debt by AG Insurance
AG Insurance SA/NV ("AGI"), a 75% subsidiary of ageas SA/NV, successfully placed and issued new perpetual subordinated notes on 21 March 2013 in an amount of USD 550 million at an interest rate of 6.75%, to be reset every 6 years from the date of issue.
AGI will use the proceeds of the new perpetual subordinated notes to (i) call the EUR 250 million NITSH II on-loan from AHF and (ii) redeem EUR 163.6 million nominal (at 91% of par value) of the Hybrone on-loan from AHF.
AHF to call all NITSH II securities at first call date
The call notice on the EUR 250 million NITSH II on-loan that AGI sent to AHF, combined with a call notice on the EUR 375 million NITSH II on-loan received from BNP Paribas Fortis SA/NV (formerly Fortis Bank SA/NV) ("BNP Paribas Fortis"), allows AHF in turn to notify the holders of the NITSH II securities of its call and redemption of all the NITSH II securities outstanding at their first call date on 3 June 2013.
AHF accepted all tendered Hybrone securities
Due to the early redemption by AGI of EUR 163.6 million of the EUR 500 million Hybrone on-loan, AHF was also able to accept all tendered Hybrone securities through the tender offer launched by AHF on 6 March 2013. The cash tender offer was executed at a purchase price of 91.0% of the nominal amount of the Hybrone securities. The capital gain on this transaction will be recorded by AGI in the first quarter of 2013. After the settlement of the tender offer, EUR 336.4 million of the Hybrone securities will remain outstanding.
Ageas welcomes the newly issued hybrid debt by AG Insurance as well as the tender offer and call by AHF for various reasons:
The credit exposure to BNP Paribas Fortis reduces
As result of the break-up of Fortis in 2009, AHF has a EUR 375 million and USD 750 million credit exposure in subordinated format to BNP Paribas Fortis. The call by BNP Paribas Fortis of the EUR 375 million on-loan reduces Ageas' credit exposure to BNP Paribas Fortis.
AHF continues to have a USD 750 million subordinated exposure to BNP Paribas Fortis as a result of the on-lending by AHF of the proceeds of the NITSH I securities. These securities have a first call date on 27 August 2013. AHF will confirm the status of this exposure to the market in due course while notifying the holders of the NITSH I securities of its intentions with regard to a potential call of the NITSH I securities.
The guarantees granted on AHF hybrid debt reduce
The guarantees granted by Ageas on the AHF hybrid debt reduce significantly.
Lower financing costs
The new hybrid perpetual subordinated notes issued by AG Insurance carry an interest rate of 6.75%, lower than the 8% rate that was applicable on the NITSH II securities.
Increased transparency
The replacement of hybrid securities issued by AHF with mixed exposure to AG Insurance and BNP Paribas Fortis by hybrid securities directly issued by AG Insurance creates greater transparency.
Hybrid capital will likely be more Solvency II compliant
The new subordinated perpetual notes issued by AG Insurance are expected to be Solvency II compliant.
