Ace Group $5.3 Billion Bond to Help Finance $28.3 Billion Acquisition of Chubb

October 27, 2015

Ace Group on Tuesday announced a $5.3 billion four-part bond to help finance its acquisition of Chubb, Reuters reported this morning.

The Chubb deal is expected to be priced later today.

Ace filed its preliminary prospectus on the notes on Oct. 23.

Morgan Stanley, JP Morgan and Citigroup are handling the transaction, comprising five, seven, 10.5 and 30-year tranches.

Last Friday, Fitch Ratings said it expects to assign an “A” rating to the $5.3 billion senior unsecured notes issuance. The new notes will be fully and unconditionally guaranteed by ACE and are therefore based on ACE’s ‘A+’ Issuer Default Rating (IDR), Fitch said.

Fitch said it views the planned debt issuance favorably since it eliminates near-term acquisition financing risk. Additionally, the debt will likely be issued at reasonable interest rates similar to existing debt, and the resulting overall debt maturity profile will be well laddered, Fitch said.

Moody’s today said it assigned an A3 rating to the senior notes and affirmed the existing debt ratings of Ace. The rating outlooks are stable. Moody’s said the debt ratings “reflect the group’s franchise strength with a diversified international spread of risk, strong profitability, as well as its operating and financial leverage profile, pro forma for the transaction.”

Moody’s said Zurich-based ACE intends to use net proceeds from this offering to fund the acquisition of Chubb, along with $9 billion of available liquidity between the two companies and about $14 billion of newly issued shares.

On July 1, 2015, Ace announced that the company had agreed to purchase all outstanding shares of Chubb for $28.3 billion with a combination of cash, debt, and equity, or approximately a 30 percent premium relative to the prior day closing stock price for Chubb.

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