F&G Annuities & Life Prices Senior Unsecured Notes Offering
F&G Annuities & Life has announced a public offering of $550 million in senior unsecured notes with a 6.500% interest rate, due in 2029. The offering, expected to close on June 4, 2024, is contingent upon customary conditions and will be guaranteed by F&G's subsidiaries. The company plans to use part of the proceeds to finance a $250 million cash tender offer for FGLH's 5.50% Senior Notes due 2025. The remaining funds will be allocated for general corporate purposes, including debt repayment. BofA Securities, J.P. Morgan, RBC Capital Markets, and Wells Fargo are among the joint managers for this offering.
- F&G is issuing $550 million in senior unsecured notes, which may increase capital flexibility.
- The 6.500% interest rate on the notes is attractive for investors seeking stable returns.
- The offering is expected to close soon, by June 4, 2024, ensuring timely capital influx.
- Proceeds will partially finance a cash tender offer for $250 million of FGLH's 5.50% Senior Notes due 2025, potentially reducing near-term debt obligations.
- The remaining proceeds will fund general corporate purposes, providing flexibility for repurchase, redemption, or repayment of outstanding debt.
- The issuance of senior notes increases F&G's long-term debt, potentially affecting leverage ratios.
- The 6.500% interest rate on the new notes could lead to higher interest expenses over time.
- Utilizing proceeds for debt repayment and general corporate purposes may indicate existing liquidity issues.
- The offering might dilute current investor holdings, affecting stock performance negatively.
Insights
F&G Annuities & Life's decision to price a public offering of
From a financial health perspective, this offering can be viewed positively if it leads to the reduction of overall debt burden and strengthens the balance sheet. However, it's important to note that issuing new debt to repay existing debt doesn’t reduce the company's leverage but can be a tactical move to manage interest costs and extend debt maturities.
Investors should also consider the market conditions under which these notes are being issued. The higher interest rate of 6.500% suggests that the market may perceive some risk associated with F&G's creditworthiness. While the company's ability to secure this financing reflects investor confidence, the relatively high coupon could imply a higher risk premium. This may affect the company's profitability in the long run, especially if the market interest rates change unfavorably.
Looking at this event from a broader market context, the issuance of senior unsecured notes by F&G Annuities & Life also highlights the current trends in the insurance and annuities market. Companies in this sector often resort to such financing methods to ensure they have adequate liquidity for operational needs and to capitalize on growth opportunities. The move to refinance debt through new notes also indicates the company’s focus on maintaining a balanced and healthy capital structure.
Additionally, the involvement of major financial institutions as joint book-running managers and co-managers reflects confidence in F&G's market position. The participation of names like BofA Securities, J.P. Morgan Securities and RBC Capital Markets can be seen as a vote of confidence and may ease concerns regarding the company’s creditworthiness among retail investors.
For retail investors, understanding the implications of debt refinancing is crucial. While it may lead to improved financial stability if managed well, it also brings certain risks. The increase in debt load with new issuance and the higher interest rate environment could pressurize the company's earnings if not handled prudently.
The notes will be guaranteed on an unsecured, unsubordinated basis by each of F&G's subsidiaries that are guarantors of F&G's obligations under its existing credit agreement.
F&G intends to use a portion of the net proceeds of this offering to finance a cash tender offer by Fidelity & Guaranty Life Holdings, Inc. ("FGLH"), its wholly owned subsidiary and a guarantor of the notes, for up to
BofA Securities, Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC are acting as joint book-running managers; Citigroup Global Markets Inc., Citizens JMP Securities, LLC, KeyBanc Capital Markets Inc. and
The public offering is being made pursuant to a registration statement (including a prospectus, as supplemented) that F&G has filed with the
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About F&G
F&G is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of insurance solutions serving retail annuity and life customers and institutional clients and is headquartered in
Forward-Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are not related to present facts or current conditions or that are not historical facts, as well as statements that address activities, events, or developments that F&G anticipates will or may occur in the future, including, but not limited to, such things as the anticipated timing and closing of the offering of the notes, the use of net proceeds from the offering of the notes and other such matters. You can identify forward-looking statements by words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "predict," "project," "seek," "outlook," "future," "will," "would," "should," "could," "may," "can have," "likely" and similar terms. Forward-looking statements include statements based on management's current expectations and assumptions about future events. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond F&G's control, that could cause actual results to differ materially from those in or implied by the forward-looking statements. Factors that may cause such differences include the risks and uncertainties described in F&G's Annual Report on Form 10-K for the year ended December 31, 2023, as amended, F&G's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and the other reports and filings F&G makes with the SEC. These forward-looking statements speak only as of the date of this press release. F&G disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, changes in assumptions or otherwise.
Contact:
Lisa Foxworthy-Parker
SVP of Investor & External Relations
515.330.3307
Investor.relations@fglife.com
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SOURCE F&G Annuities & Life, Inc.
FAQ
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