NN Group eyes double offering ahead of Delta Lloyd purchase
NN Group mandated banks for an offering of senior and subordinated debt on Monday, as the firm looks to merge with fellow Dutch insurer Delta Lloyd.
By Tyler Davies09 Jan 2017
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NN Group mandated Citi, ING, JP Morgan and Morgan Stanley as joint bookrunners for the dual-tranche transaction, which included a 31 year non-call 11 subordinated bond and a six year senior bond.
An investor call will take place on Monday, and bankers expect a new issue will take place on Tuesday.
Though NN Group said it would use the proceeds from the sale for refinancing needs and general corporate purposes, CreditSights analyst Raymond Tam and Philippe Picagne believe the senior bond will more likely be used for the insurer’s potential purchase of Delta Lloyd.
“Our rationale for this conclusion is two-fold. Firstly, NN does not need to refinance its only outstanding senior bond, the 1% €600m which matures in 2022,” said the analysts. “And secondly, NN does not seem to need any liquidity considering it had €2.4bn of cash at the holding company in the third quart of 2016.”
On December 23, NN Group and reached a conditional agreement with Delta Lloyd regarding a potential merger. According to the agreement, NN Group will purchase Delta Lloyd for a total of €2.5bn via an all-cash public offer — based on a price of €5.40 per share.
Standard & Poor’s placed NN Group on CreditWatch negative last October, and decided to maintain the insurer’s status last Wednesday. The ratings agency said it was unsure about how NN Group’s planned purchase of Delta Lloyd would affect the institution’s capital position and earnings.
“We remain positive on this transaction and believe the pro forma Solvency II ratio of 189% along with synergies of the merger looks good,” said Claire McNicol, a senior financials credit analyst at Rabobank.