Aflac Incorporated (NYSE:AFL) recently announced the public offering of senior notes in two series. The notes are slated to mature in 2026 and 2046, respectively. The $300 million (par value) senior notes have been priced at a coupon rate of 2.875% and are due in due 2026. On the other hand, the $400 million (par value) senior notes, which are scheduled for maturity in 2046, have been priced at a coupon rate of 4%.
The company has also announced the re-offer yield for both series of senior notes. The series, which is due in 2026, will likely be priced at 99.816 and have a re-offer yield of 2.896%. The series, which is due in 2046, would have the issue price of 99.235 and a re-offer yield of 4.044%.
Aflac intends to use the net proceeds from the offering to repay $650 million principal amount outstanding of its 2.65% senior notes that were issued in February and July of 2012. The 2.65% senior notes would mature in 2017. The remaining proceeds, if any, would be utilized to finance general corporate purposes.
As of Jun 30, 2016, the company had a total long-term debt of $5009 million, up nearly 1% from year-end 2015. By the end of second quarter, the debt-to-equity ratio was 22%, up 600 bps from Dec 31, 2015. With the latest issuance, the company’s debt-to-equity ratio is expected to deteriorate to 25% due to an increase of 300 bps.
The Zacks Rank #3 (Hold) insurer has an extraordinary capability of handling leverage. Consistent earnings and a solid liquidity have enabled Aflac to maintain strong risk-adjusted capital.
Stocks That Warrant A Look
Some better-ranked stocks from the same space are Allied World Assurance Company Holdings, AG (NYSE:AWH) , National Interstate Corporation (NASDAQ:NATL) and NMI Holdings Inc (NASDAQ:NMIH) . All of the stocks sport Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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AFLAC INC (AFL): Free Stock Analysis Report
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