Sun Life Financial Inc. (TO:SLF) recently announced that it plans to issue about C$1 billion or $0.765 million in Series 2016-2 Subordinated Unsecured 3.05% Fixed/Floating Debentures in Canada. The debentures are scheduled to mature in 2028.
The company intends to deploy the net proceeds for general corporate purposes. This includes investments in subsidiaries and debt repayments to lower the same.
Sun Life Financial displays its prudence by issuing debentures amid a low interest rate environment. Given the low interest rate environment, the company is consciously making efforts to reduce its interest burden on borrowings, which in turn, is facilitating margin expansion. Also, the current rates make it easier for companies to meet their debt obligations on time. Most companies have preferred to issue debt at the prevailing low rates over the past few years and are expected to continue doing so before the Fed hikes rates.
This February, the company issued $350 million or $255.7 million of 3.10% Fixed/Floating Debentures scheduled for maturity in 2026.
Sun Life Financial’s debt to equity ratio at the end of the second quarter was 16.4%, up 360 basis points year over year. With the new issuance, the ratio is expected to move up 320 basis points. Also, Sun Life Financial needs to dish out about additional interest annually. In the last reported quarter, the company’s interest expense declined by about 6%. Nonetheless, the life insurer’s solid operational performance and robust financial position continue to support its efforts to generate substantial funds to service debt uninterruptedly.
Sun Life Financial presently carries a Zacks Rank #3 (Hold). Some better-ranked insurers are Health Insurance Innovations, Inc. (NASDAQ:HIIQ) , Primerica, Inc. (NYSE:PRI) , and Reinsurance Group of America Inc. (NYSE:RGA) . While Health Insurance Innovations sports a Zacks Rank #1 (Strong Buy), Reinsurance Group and Primerica carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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PRIMERICA INC (PRI): Free Stock Analysis Report
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HEALTH INS INN (HIIQ): Free Stock Analysis Report
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