U.K.’s RSA Group Makes Market Move Despite Its Safety from No-Deal Brexit

August 20, 2019

RSA Insurance Group Plc is issuing sterling debt well ahead of an October 31 Brexit deadline, even though the U.K. insurer will likely fare better in a disorderly exit than many of its less-diversified peers.

The company has reopened the sterling bond market with a 350 million-pound ($422 million) sale of five-year notes being marketed at about 135 basis points above U.K. gilts from an initial target of about 145 basis points, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. Investors have bid for more than 685 million pounds of the securities, in what is the sterling debt market’s first deal since July 30, according to data compiled by Bloomberg.

The U.K.-listed company may be largely sheltered from any no-deal Brexit upheaval as a large share of group operating profit comes from overseas in regions like Scandinavia and Canada, it said in its most recent results statement. “RSA is well insulated from direct impacts of Brexit,” a company spokesman said in an emailed statement to Bloomberg News. “We don’t foresee any material operational impacts on our business.”

Still, with sterling borrowing costs climbing as the prospect of a disorderly Brexit grows ever-likely, borrowers in need of pound funding may need to act sooner rather than later to get deals done. “Who knows what the state of the market will be if we close in on a no-deal exit,” said Gordon Shannon, a portfolio at TwentyFour Asset Management LLP, which oversees 15.3 billion-pounds in assets. “It’s a good time to get something done from their point of view.”

Citigroup Inc. and HSBC Holdings Plc are joint lead managers on RSA’s transaction, which is expected to be rated BBB+ by S&P Global.

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