Liberty Mutual to sell $1 billion fixed-to-floating junior subordinated hybrid notes in two tranches

By Paul A. Harris

St. Louis, Feb. 27 - Liberty Mutual Group, Inc. is in the market with a $1 billion two-part offering of hybrid securities (Ba1/BB+), according to an informed source.

Citigroup, JP Morgan, Banc of America Securities LLC and Wachovia Securities are joint bookrunners.

The offering is comprised of a tranche of series A securities that come with an 80-year final maturity and a 30-year scheduled maturity.

The series A securities are non-callable and will bear interest at a fixed rate until 2037, after which the rate will float at the original Libor spread plus 100 basis points.

Price guidance on the series A tranche is Treasuries plus 300 bps.

The deal also features a tranche of series B securities with a 60-year final maturity and a 30-year scheduled maturity. The series B securities are callable in 10 years and bear interest at a fixed rate until 2017. If not called at that point, the rate will float at the original Libor spread plus 100 bps.

Price guidance on the series B tranche is Treasuries plus 237.5 bps.

The securities are guaranteed by Liberty Mutual Holding Co. Inc. and by LMHC Massachusetts Holdings Inc.

The prospective issuer is a Boston-based insurance group.

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