S&P rates Helvetia notes BBB+

S&P said it assigned its BBB+ long-term issue rating to the junior subordinated perpetual and junior subordinated dated tier 2 notes to be issued by Helvetia Schweizerische Versicherungsgesellschaft AG. The group's parent, Helvetia Holding AG (not rated), will guarantee the notes.

“We expect to classify the notes as having intermediate equity content. We consider both issues to be tier 2 capital in our capital model,” said S&P in a press release.

The issue rating on the proposed notes is two notches below the long-term issuer credit rating on Helvetia. This reflects S&P’s standard approach for rating subordinated debt issues. The solvency ratios measured by the Swiss Solvency Test of the consolidated group stood at 222% as of Jan. 1, 2019.

“We therefore consider the risk of mandatory deferral to be remote and we do not think it is necessary to deduct a further notch for additional nonpayment risk to derive the rating on the notes. The issue rating reflects the subordination and interest deferral features of the notes,” S&P said.

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