HG bonds: SBL Holdings targets revolver borrowings with 2031 notes; terms

SBL Holdings Inc today completed an upsized $600 million offering of 5% 10-year notes due Feb. 18, 2031, at T+400, or 5.134%.

The issue, which was originally marketed at $400 million, was printed in line with at-the-number guidance and through initial whispers at T+437.5-450.

Proceeds will be used to reduce outstanding borrowings under the company’s revolving credit facility, according to the rating agencies.

SBL Holdings last tapped the market in November 2019, when it placed a $400 million offering, at par pricing, of 5.125% seven-year notes due Nov. 13, 2026, at T+335.

SBL Holdings is a non-operating holding company and subsidiary of Security Benefit Corp. The insurance operating companies in the group are Security Benefit Life Insurance Co. and First Security Benefit Life Insurance and Annuity Co. of New York.

Late last week, S&P Global Ratings and Fitch assigned respective BBB- ratings to the new bond placement.

Of note, both operating companies, Security Benefit Life Insurance Co. and First Security Benefit Life Insurance and Annuity Co. of New York, have an S&P Global Ratings financial strength rating of A-, and stable outlooks. S&P Global Ratings said the new notes would have a limited impact on financial leverage, which it expects the company to maintain at about 25%-30% in 2020 and 2021. Ratings also noted, on Feb. 5, that SBL Holdings has a balance of $553 million under its revolving credit facility.

Fitch maintains a negative outlook on its BBB issuer default rating (IDR), which dates of April 2020, and resulted from the risk posed by the COVID-19 pandemic. On Feb. 5, Fitch assigned a BBB- rating to the new 2031 notes, which is one notch below the company’s IDR, reflecting standard notching based on Fitch's insurance rating criteria. Terms: