Moody’s applies Ba1 (hyb) to Old Mutual notes

Moody's Investors Service said it assigned a Ba1 (hyb) rating to the proposed subordinated notes to be issued by Old Mutual plc under the £5 billion euro medium-term note program.

The outlook is stable, in line with the outlook on Old Mutual’s Baa3 senior debt rating.

The Ba1 (hyb) subordinated debt rating is one notch below Old Mutual’s senior debt rating, in line with the agency’s notching practice for subordinated debt issued from the holding company, and reflects (a) the subordination of the bonds; (b) the optional and mandatory coupon skip mechanisms; and (c) the cumulative nature of deferred coupons, in case of deferral.

The new issuance is a dated subordinated notes issue with a bullet maturity of 10 years. The notes will rank (a) junior to senior debts (£112 million, 7 1/8% outstanding senior notes); (b) ahead of junior securities (£273 million, 6.4% outstanding perpetual tier 1 notes); and (c) pari-passu with subordinated obligations (£500 million, 8% outstanding Tier 2 10-year notes).

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