Baloise May Reduce Senior Debt Levels by 2020 on Interest Rates
Baloise Holding AG (BALN), Switzerland’s third-biggest insurer, said it may reduce the level of its outstanding senior bonds by 2020 to cut its financing costs.
“If interest rates rise, we have the choice to either refinance expiring bonds or just reduce the leverage ratio,” Chief Financial Officer German Egloff said today at the company’s investor day in Basel, Switzerland. “Since we assume higher yield levels in the mid-term future, the leverage level in say 2020 might be somewhat lower than today’s level.”
The insurer has 700 million francs ($782 million) in outstanding senior debt that will expire between 2017 and 2020 and it will let some of those bonds run out rather than refinance them, as financing costs are lower in the current environment of low interest rates.
The money that Baloise saves by letting some of the senior bonds expire could be used in various ways to increase its “financial flexibility,” Egloff said. The company has no target by how much it will reduce the level of outstanding bonds.
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