Scor SE issued $625 million in what it said was a pioneering issuance of Restricted Tier 1 notes in U.S. dollars.
The French reinsurer said the issuance was the first of an RT1 instrument with a principal write-down feature in dollars. RT1s are similar to the Additional Tier 1 notes issued by banks, converting into equity or being wiped out if the issuer breaches given capital thresholds.
The notes carry a coupon of 5.25% until the first call date of March 13, 2029, after which the coupon rate will change to the five-year U.S. Treasury yield plus 2.37%. Scor said the notes were swapped into euros for an 11-year period, providing an effective yield cost to the company of 2.95%, corresponding to a 177 basis point spread over the 11-year euro midswap rate.
Scor Chairman and CEO Denis Kessler noted that the issuance was more than 4x oversubscribed.
Settlement is expected to occur March 13. Scor expects proceeds from the notes to be eligible for inclusion in its Tier 1 regulatory capital, in line with applicable rules and regulatory standards, and as equity credit in rating agency capital models.
Scor intends to use the proceeds for general corporate purposes. It will also use the proceeds to redeem its CHF315 million and CHF250 million subordinated note lines, callable in June and November respectively, subject to market conditions and regulatory approval.
