Fitch rates Unum Group's P-Caps BBB-

Fitch Ratings said it assigned a BBB- rating to a minimum of $350 million of pre-capitalized trust securities (P-Caps) issued by Hill City Funding Trust, a newly created trust established by Unum Group.

The proceeds will be invested in a portfolio of principal and interest strips of U.S. Treasuries, and the trust will enter a facility agreement with Unum that gives it the right to deliver senior debt maturing on Aug. 15, 2041, to the trust in exchange for eligible assets.

“If UNM exchanges eligible assets for senior notes, the senior debt would rank pari passu in right of payment and upon liquidation to UNM's current and future senior debt obligations. As such, the ratings on the P-Caps are equivalent to the ratings assigned to UNM's existing senior unsecured notes, which are currently rated BBB-,” Fitch said in a press release.

The agency said it believes the newly issued securities provide UNM with another source of capital and liquidity that could be used in a stress scenario.

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