Fitch Rates SCOR's Subordinated Notes at 'A-'
OREANDA-NEWS. Fitch Ratings has assigned SCOR SE's (SCOR) EUR500m issue of subordinated notes a rating of 'A-'. The notes are rated two notches below SCOR's Long-term Issuer Default Rating (IDR) of 'A+'/Stable, to reflect their subordination and loss absorption features, in line with Fitch's notching criteria.
KEY RATING DRIVERS
The proceeds of the Tier 2 subordinated notes will be used for general corporate purposes. The new securities have been issued with a coupon of 3.625% and a 32-year maturity, callable after a period of 12 years. The notes include a mandatory interest deferral feature that would be triggered if the company were unable to meet the applicable Solvency Capital Requirement (or Minimum Capital Requirement), as defined in the Solvency II directive.
We have applied a baseline recovery assumption of 'below average' and a non-performance risk assessment of 'moderate' to the Tier 2 notes. As a result, the rating is notched down two times from the IDR; one notch for recovery prospects and one notch for non-performance risk.
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. Although financial leverage will remain above 25% through most of 2016, it is expected to return to being commensurate with SCOR's rating category by the end of 2016.