HG bonds: GA Global Funding places debut FA-backed offering; terms

GA Global Funding Trust today completed a debut offering of 1.625% five-year, funding-agreement backed notes due Jan. 15, 2026, at T+117, or 1.649%. The issue was initially marketed at $400 million, before an upsize to $650 million.

GA Global Funding Trust is a newly formed special purpose statutory trust organized under the laws of Delaware. The notes issued by GA Global Funding Trust are secured by funding-agreement, or FA, contract obligations issued by Forethought Life Insurance Company, which is a core entity within the Global Atlantic Financial Group Ltd., a Bermuda-based insurance company.

Of note, in July 2020, KKR & Co. announced that it would acquire Global Atlantic Financial Group, and the transaction is expected to close in the early part of this year.

Yesterday, S&P Global Ratings assigned an A- rating to the new FA-backed notes. "We do not consider these notes financial leverage or capital for FLIC or for Global Atlantic Financial Group on a consolidated basis, since we believe the assets allocated to the program are sufficient to meet any obligations without reliance on the company's other financial resources," the agency noted on Jan. 7.

At the same time, Moody's and Fitch assigned respective A/A3 ratings to the $10 billion FA-backed global note issuance program under which these new notes are issued.

Moody's maintains a positive outlook on GA Global Funding Trust. "The positive outlook reflects Moody's view that the upcoming transaction with KKR & Co. Inc. will provide Global Atlantic access to capital and improve the company's business profile over the long term. It also reflects Global Atlantic's consistent profitability and improvement in its market position achieved growing its distribution reach through both its retail and institutional channels. The company has also become less reliant on bank financing and demonstrated increased access to capital markets," Moody's said Jan. 7.

Fitch said the new notes are dependent on Forethought Life Insurance's, or FLIC, credit quality. "The note program's 'A' rating recognizes that the obligations are secured by funding agreements with cash flow structures that enable the trust to make payments on the notes. Scheduled payments under these funding agreements are accorded a priority in liquidation equal to the policyholders of FLIC," Fitch said Jan. 7. Terms: