A wholly-owned subsidiary of AXIS Capital Holdings Limited (AXS), AXIS Specialty Finance has priced the offerings of its senior unsecured notes.
The company placed a $250 million senior notes offering, which carries a coupon rate of 2.650% and is scheduled to mature in 2019. Another offering of $250 million with a coupon rate of 5.150% will mature in 2045.
AXIS Capital intends to use the net proceeds from the debt transaction to pay off its 5.75% senior note which is due to mature in 2014.
AXIS Capital applied for its newly declared senior notes to get admitted in the Irish Stock Exchange and traded in the Global Exchange Market. Trading in the notes is expected to start within 30 days subject to the approval.
As of 2013-end, the debt-to-capital ratio for AXIS Capital was 14.7%. This remained unchanged with the 2012 level. With the current issuance of $500 million notes, the same is expected to increase by another 340 bps to 18.1%.
The new issuance is also expected to push interest expense higher for AXIS Capital. The figure had increased 0.8% year over year to $15.6 million in the fourth quarter of 2013. Nonetheless, AXIS Capital’s solid operational performance generates enough funds to service debt uninterruptedly. The company’s interest coverage ratio of 13.9% lies below the industry level of 23.1%.
AXIS Capital presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth mentioning in the property and casualty insurance industry are Alleghany Corp. (Y), AmTrust Financial Services, Inc. (AFSI) and Fidelity National Financial, Inc. (FNF). All these stocks sport a Zacks Rank #1 (Strong Buy).