OREANDA-NEWS. Fitch Ratings has assigned Old Mutual Life Assurance Company (South Africa) Limited's (OMLACSA) proposed issue of subordinated debt securities an expected rating of 'AA(zaf)(EXP)'.

The final rating is contingent on the receipt of final documents conforming to information already received.

The notes are rated two notches below OMLACSA's National Long-term Rating of 'AAA(zaf)' to reflect their subordination and moderate risk of non-performance, in line with Fitch's notching criteria.

KEY RATING DRIVERS
OMLACSA's proposed issue of subordinated notes will be issued with a 10-year, 12-year or 15-year maturity or a mixture thereof and will be callable after a period of five to 10 years. They could also be composed of both fixed and floating coupons. The notes include a mandatory interest deferral feature, which is triggered when the company's capital level falls below the regulatory capital requirement.

According to Fitch's methodology, this subordinated bond is classified as 100% capital due to regulatory override within Fitch's risk-based capital calculation and is classified as 100% debt for the agency's financial leverage calculations. Fitch expects leverage to remain low for OMLACSA's rating category and interest coverage to be strong.

RATING SENSITIVITIES
The ratings are sensitive to changes in OMLACSA's National Long-term rating.