Moody’s assigns A2(hyb) to Allianz bond

Moody's Investors Service said it assigned an A2(hyb) rating to the 30-year €1.5 billion subordinated bond to be issued by Allianz SE (Aa3 insurance financial strength rating).

The outlook on this debt is stable, in line with the stable outlook on Allianz.

The A2(hyb) rating is consistent with Moody's standard notching practices for debts issued by insurance operating companies, and reflects: (a) The subordination of the bond; (b) the optional and mandatory weak coupon skip mechanisms; and (c) the cumulative nature of deferred coupons, in case of deferral.

The bond is a dated subordinated debt and ranks pari passu with Allianz’s existing dated subordinated debt.

Proceeds will be used for general corporate purposes. Moody's expects only a marginal negative impact on Allianz' financial leverage (estimated at between 25% and 26% after the call of €1 billion of debt in January 2015 compared to 27% at year-end 2013) and earnings coverage (remained in the 6 times to 8 times range in 2014; 7.7 times in 2013). The positive impact on the Group's Solvency II capitalization is also limited at around 4% points on a pro-forma year-end 2014 basis.

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