Aflac Swaps Senior Notes - Analyst Blog
February 16 2012 - 8:00AM
Zacks
Aflac Inc. (AFL)
recently announced that it has entered into agreements with three
separate parties to swap the previously issued senior notes worth
$750 million into yen currency.
The first set of five-year $400
million senior notes which contained a fixed coupon rate of 2.65%
was swapped for a coupon rate of 1.22% at yen 30.9 billion.
Now, the second set of ten-year
$350 million senior notes, with a fixed coupon rate of 4.0% was
converted into a value of yen 27.0 billion with a coupon rate of
2.07%.
Management’s intent was to gain a
higher debt rating utilizing a lower Japanese effective interest
rate from this transaction. The proceeds from the sale of these
notes are also to be used to clear off the company’s 1.87% Samurai
notes which currently stand due in June 2012 valuing at $347
million.
Previously, in its fourth quarter
earnings, the company appreciated its operating earnings per share
by 6% using gains from yen/dollar exchange rate. Aflac’s constant
desire to ameliorate its capital position in the market is a
favorable sign for its investors as it is calculated to bolster
confidence in their minds.
The company seems to be in quite a
formidable position at present to battle its ominous competitors
such as AMERISAFE, Inc. (AMSF), Employers
Holdings Inc. (EIG) and Seabright Holdings,
Inc. (SBX).
We currently expect Aflac’s first
quarter of fiscal 2012 to yield an EPS of $1.67/share and
$6.67/share for the full year 2012.
We maintain our Neutral
recommendation on the stock. Our recommendation is supported by
Zacks #3 Rank, which translates into a short-term rating of
Hold.
AFLAC INC (AFL): Free Stock Analysis Report
AMERISAFE INC (AMSF): Free Stock Analysis Report
EMPLOYERS HLDGS (EIG): Free Stock Analysis Report
SEABRIGHT INSUR (SBX): Free Stock Analysis Report
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