S&P rates Grupo Sura notes BBB

Standard & Poor’s said it affirmed the BBB ratings on Grupo de Inversiones Suramericana SA (Grupo Sura).

The agency also said it assigned a BBB rating to Grupo Sura’s proposed long-term senior unsecured notes of up to $540 million, which will be issued by Grupo Sura Finance, a special-purpose entity and wholly owned subsidiary of Grupo Sura created solely to issue the notes.

The outlook remains negative.

The ratings reflect an expectation that Grupo Sura will continue to protect its cash flow and leverage metrics despite the challenges inherent in the company’s investment portfolio growth strategy, S&P said.

Recently, Grupo Sura engaged in two important transactions, one related to the purchase of 7.3% of the shares of Sura Asset Management from General Atlantic Cooperatief, which will increase the ownership stake in Sura Asset to about 78.7%.

This acquisition was funded through a bridge loan that totaled $540 million, which will be repaid in full with the proceeds from the proposed issuance of long-term senior unsecured notes, S&P said.

The other transaction relates to a $320 million equity contribution to its subsidiary Suramericana SA to fund the acquisition of RSA Insurance Group plc’s insurance operations in Latin America, the agency said.

The negative outlook reflects the negative outlook on the Republic of Colombia as the company won’t overcome a sovereign default stress-test scenario, which makes it highly unlikely that it could remain at its current rating level if the sovereign foreign-currency rating is lowered, S&P explained.

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