Sun Life Financial Inc., a Canada-based insurance firm listed on multiple exchanges, has issued CAD 500 million of Canadian dollar-denominated debentures —about $375.5 million—to partially fund its recent buyout of US-based employee benefits firm Assurant Inc.
In a statement attached to its disclosure to the Philippine Stock Exchange (PSE), Sun Life said it offered CAD 500 million subordinated unsecured and fixed debentures in Canada, with a 2.60 percent interest rate and ten-year tenor due in 2025.
“The offering is expected to close on September 25, and the proceeds will be used to partially fund the acquisition of the employee benefits business of Assurant and may also be used for general corporate purposes, which may include investments in subsidiaries,” Sun Life said.
“The debentures will be sold on a best efforts agency basis by a syndicate led by RBC Capital Markets and CIBC as co-leads. The proceeds from this offering are expected to qualify for Tier 2B capital,” it added.
Unlike the wider bonds, debentures are securities sold by the companies usually to fund acquisitions and are set for short-term maturity. Issued debentures are never asset-backed or secured by any collateral, but are only backed by credit of the issuer.
Early this month, Sun Life said it is expecting to close the $975-million Assurant buyout by the first quarter next year.
Assurant is the company’s second acquisition this year as part of a bid to expand its US Group. Sun Life earlier acquired North American property investment managing firm Bentall Kennedy Group for $560 million.
The Assurant acquisition is seen to boost the size and scale of Sun Life’s US Group Benefits business, pegged to grow by over 50 percent to about $4 billion annually after full realization.
Established 150 yeas ago, Sun Life is one of the leading life insurance companies globally, operating in various markets worldwide including Canada, the US, United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, China, Australia, Singapore, Vietnam, Malaysia and Bermuda.
As of end-June, the group had total assets under management of CAD 808 billion or $606.76 billion.
Aside from the PSE, Sun Life is listed on the Toronto and New York stock exchanges under the SLF ticker symbol.