Phoenix Sees Earlier Investment Grade Rank in Deals Push
Phoenix Group Holdings (PHNX), the U.K.’s biggest manager of life-insurance funds closed to new customers, said it expects to secure an investment grade rating by June 2015, a year earlier than planned, as it bids to ease access to capital markets and accelerate deals.
“We will start engaging with rating agencies later this year,” Phoenix Finance Director James McConville said in a phone interview from London today. “In the second quarter we shall hopefully have applied for and received an investment grade rating.”
McConville and Chief Executive Officer Clive Bannister, hired in 2011, are seeking to reduce debt and refinance at lower cost after Phoenix’s purchase of Resolution Plc for 5 billion pounds in 2007. Senior debt fell more than 500 million pounds from the start of the year to 1.2 billion pounds ($1.99 billion), the company said today as it reported first-half operating profit rising 43 percent.
Bannister said last month he’s ready to make acquisitions after winning a 900 million-pound five-year facility to refinance remaining senior bank debt. Phoenix sold Ignis Asset Management to Standard Life Plc (SL/)’s investment unit in July for 390 million pounds in cash and used those proceeds to prepay debt.
Phoenix issued 300 million pounds of seven-year senior unsecured bonds at an annual coupon of 5.75 percent on July 7. The debt wasn’t rated.
First-half operating profit rose to 266 million pounds from 186 million pounds a year earlier, the Jersey-based company said in a statement.
“The balance sheet has been transformed, our structure has been simplified and our reliance upon bank financing has been reduced,” Bannister said in the statement.
Phoenix generated cash of 332 million pounds in the first half, boosted by the Ignis sale, and said it remained on track to achieve a full-year target of as much as 550 million pounds.
The insurer said it will pay a first-half interim dividend of 26.7 pence a share, unchanged from a year earlier.