S&P rates AXIS Capital preferreds BBB

S&P said it assigned a BBB preferred stock rating to AXIS Capital Holdings Ltd.’s $550 million series E 5.5% non-cumulative perpetual preferred shares.

AXIS also granted the underwriters a 30-day option to purchase up to $50 million additional shares, which will potentially increase the total amount raised to $600 million, the agency said.

The proceeds from this issuance will be used to redeem or repurchase all of the company’s outstanding $400 million 6.875% series C preferred shares.

The proceeds will be used for general corporate purposes, which might include common share repurchases, S&P said.

Consistent with the hybrids rating criteria, the agency said it will treat these preferred shares as intermediate-equity-content hybrids.

This preferred stock issuance is expected to temporarily increase AXIS’s financial leverage to about 29% and decrease fixed-charge coverage to 6x at year-end 2016, S&P added.

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