June 26 (Bloomberg) -- RSA Insurance Group Plc, the U.K.’s largest non-life insurer by market value, is seeking a loan for as much as 500 million pounds ($778 million) to refinance an existing credit line, according to two people with knowledge of the matter.
RSA is self-arranging the five-year facility and is looking for 10 banks to participate, each providing about 50 million pounds, said the people, who asked not to be identified because the negotiations are private. The loan will replace a 455 million-pound facility signed in 2006 that’s due to mature in 2013, according to data compiled by Bloomberg.
The company is offering to pay initial interest of 50 basis points more than the London interbank offered rate for the revolving credit, which is intended to remain undrawn, one of the people said. The margin is linked to a credit-ratings grid and will rise if RSA’s rating decreases. The London-based insurer currently holds investment-grade ratings of Baa1 from Moody’s Investors Service and BBB+ from Fitch Ratings, Bloomberg data show.
The revolving credit will pay additional utilization fees of 15 basis points to borrow as much as a third of the facility, 30 basis points for more than a third, and 50 basis points for two-thirds or greater, the person said.
Lenders will also receive a commitment fee of 17.5 basis points, the person said. RSA paid an initial interest margin of 30 basis points more than Libor for the revolving credit it signed in 2006, Bloomberg data show. A basis point is 0.01 percentage points.
“Our facility is due to be renewed next Spring,” Louise Shield, a spokeswoman for RSA said in an e-mailed statement. “This renewal is just part of our ordinary course of business.”
To contact the reporter on this story: Stephen Morris in London at email@example.com
To contact the editor responsible for this story: Faris Khan at firstname.lastname@example.org