American Financial intends to tap 3.5% notes, 4.5% notes

By Devika Patel

Knoxville, Tenn., Nov. 9 – American Financial Group, Inc. intends to sell senior notes in two tranches, including an add-on to its 3.5% senior notes (Baa1/BBB+) due Aug. 15, 2026 and an add-on to its 4.5% senior notes (Baa1/BBB+) due June 15, 2047, according to a 424B5 filing with the Securities and Exchange Commission.

The company sold $300 million of 3.5% notes in a deal that priced on Aug. 15, 2016 and settled on Aug. 22, 2016. The notes were priced at 99.608 to yield 3.547%, or 200 basis points over Treasuries.

The company sold $350 million of 4.5% notes in a sale that priced on May 25 and settled on June 2. The notes were priced at 99.46 to yield 4.533%, with a spread of 160 bps over Treasuries.

The 3.5% notes have a make-whole call until May 15, 2026 at greater of par or Treasuries plus 30 bps, and then a par call. The 4.5% notes have a make-whole call until Dec. 15, 2046 at greater of par or Treasuries plus 25 bps, and then a par call.

BofA Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to redeem the company’s $350 million of 9.875% senior notes due 2019 at a price equal to the sum of par, accrued and unpaid interest and the make-whole premium.

American Financial Group is a Cincinnati-based holding company for property and casualty insurance subsidiaries.

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