Axa, Generali optimise through LM exercises

Axa and Generali completed liability management exercises taking in perpetual subordinated notes in October and November, in what is expected to be a growing theme for the insurance sector going into 2015.

Axa launched its any-and-all exchange offer on 29 October as part of active management of its refinancing programme aimed at ensuring adequate visibility and optimal terms for the renewal of its outstanding debt maturities in the coming years, according to the insurance company.

Axa repurchased an average 57% of two euro-denominated and two sterling-denominated fixed-to-floating perpetuals, and issued a new Eu984m PerpNC24 and a £723.9m PerpNC26, with the exchange made on a par for par basis and the exchange premium paid in cash. The dealers were BNP Paribas, Commerzbank, Crédit Agricole CIB, Deutsche Bank, HSBC, Natixis and Société Générale.

“The high level of participation from investors is extremely encouraging for the insurance sector,” said Chambers. “For issuers the benefits are obvious: the transaction can provide economic benefits through a reduction in the cost of funding, while also maintaining or increasing regulatory capital levels.

“The market is tried and tested for exchange offers and we would expect confidence to grow around such transactions.”

Generali launched its exercise the week after Axa, on 6 November, saying the tender offer and new issue was “in line with the Generali’s pro-active approach of efficiently refinancing its debt by addressing notes with first call dates falling between June 2016 and February 2017, with the aim of reducing interest costs during the next years and [to] optimise its regulatory capital structure”.

The insurer tendered for three undated subordinated notes and priced a new Eu1.5bn PerpNC11 issue. Eu2.01bn equivalent was tendered in the offer, representing around 59% of Eu3.42bn equivalent of targeted notes, and the issuer accepted Eu1.36bn equivalent, 40% of the targeted outstandings. The new notes were priced on 14 November at 350p over mid-swaps, the middle of IPTs.