HG bonds: Jackson Financial places $1.6B offering after spinoff; terms

Jackson Financial Inc. today completed a $1.6 billion, three-part offering across senior notes due 2023, 2031, and 2051.

In September, Jackson Financial announced that it had completed its previously planned separation from former parent Prudential PLC.

U.K.-based Prudential PLC, a provider of life and health insurance, retirement, and asset management, announced in January that it would separate from Grand Rapids, Mich.-based Jackson Financial, its U.S. insurance business. The latter changed its name from Brooke in July 2020.

Of note, on March 26, Jackson Financial put a proposed $1.6 billion, three-part offering on hold after receiving notification concerning potential claims by two recently departed executives of the business.

Proceeds from today's bond placement, together with cash on hand, will be used to repay about $1.6 billion of borrowings under the company's 2022 delayed-draw term loan facility entered into with a syndicate of banks in connection with its spinoff from Prudential PLC, according to the rating agencies. The new bond offering netted BBB/Baa2/BBB ratings assignments.

S&P Global Ratings maintains a stable outlook. It said yesterday that, pro forma for the senior debt and future issuances to replace its 2023 delayed draw term loan facility, it expects financial leverage and fixed-charge coverage to remain below 30% and above 8x, respectively.

Moody's has maintained a negative outlook on its Baa2 rating since Jan. 29, to reflect the challenges the company faces in "building capital, lowering pro-forma leverage, and diversifying an inforce block of liabilities concentrated in variable annuities (VA) as it plans to separate from Prudential."

Moody's said its Baa2 senior note ratings reflect the company's leading position in the U.S. asset accumulation business, as well as its multiple distribution channels, and efficient back-office infrastructure. "However, it has significant exposure to earnings and capital volatility from equity markets and must manage hedging and capital requirements that are sensitive to policyholder behavior, equity market returns, and interest rates," Moody's said today.

Fitch maintains a stable outlook on its BBB rating. "Over the longer term, Fitch expects that leverage will remain below 25%, in line with rating expectations and management's long-term target range of 20%-25%," Fitch said Nov. 16.

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