Fitch rates Highlands notes BB

Fitch Ratings said it assigned a BB rating to the $500 million senior secured PIK toggle notes due 2025 issued by Highlands Holdings Bond Issuer, Ltd. (HHBI).

“The BB rating on HHBI's $500 million senior secured PIK toggle notes reflects the high-risk nature of the security. The notes are substantially distanced from Aspen Insurance Holdings Ltd.’s (AIHL) operating company cash flows, with HHBI structured to be highly isolated from AIHL's regulated group. The PIK feature of the notes also adds risk with likely interest deferrals that would increase HHBI's indebtedness. In addition, the short-term five-year tenor of the notes creates refinancing risk,” Fitch said in a press release.

HHBI is a new Bermuda-exempted company formed by Apollo Global Management, Inc. to issue the notes. HHBI is a sister company of Highlands Holdings Ltd. (HH), with both companies owned by AP Highlands Holdings, LP.

Ultimately, AIHL will use the proceeds for added capital.

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