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Marsh & McLennan Cos. Inc. (MMC - Analyst Report) announced the pricing of senior unsecured notes worth $500 million in a two-part offering. The proceeds are expected to be utilized for enhancing business operations as well as to redeem $250 million of long-term notes that are due for maturity in 2015.

Accordingly, one part of the long-term notes are worth $250 million and are dated to mature in 2018. These five-year fixed rate notes bear an interest of 2.55%. The remaining tranche of $250 million notes are slated to mature in 2023. These ten-year fixed rate senior notes carry an interest of 4.05%.

Marsh & McLennan appointed BofA Merrill Lynch of Bank of America Corp. (BAC - Analyst Report), Deutsche Bank Securities of Deutsche Bank AG (DB - Analyst Report), Goldman, Sachs & Co. of Goldman Sachs Group Inc. (GS - Analyst Report) and HSBC Holdings plc as joint book-running managers for the offering. The company also appointed co-managers, which include Barclays Capital plc (BCS - Analyst Report), JP Morgan Chase & Co. (JPM - Analyst Report), Citigroup Inc. (C - Analyst Report) and Morgan Stanley (MS - Analyst Report).

Ratings Action

Meanwhile, Moody’s Investor Service of Moody’s Corp. (MCO - Analyst Report) have casted a rating of “Baa2” to both the set of notes, with a positive outlook. Additionally, the ratings agency affirmed its ratings of “Baa2” and “P-2” rating on Marsh & McLennan’s unsecured long-term debt and short-term debt, respectively.

While the ongoing slow pace of growth in the financials of Marsh & McLennan Given the low interest rate environment and sluggishness across the U.S. and European economies, growth in the financials of Marsh & McLennan continues to be slow.

Nevertheless, Moody’s appreciate the company’s financial flexibility. The optimism also derives from Marsh & McLennan’s healthy and diverse business model and its strong global presence in over 100 countries.

Meanwhile, the latest notes issue to refinance existing notes will not have any material effect on the credit profile, thereby maintaining its debt-to-EBITDA ratio between 2.5x and 3.0x. Along with a healthy financial leverage, balance sheet and coverage ratios, a net profit margin of about 12% and adjusted operating margin of 19.4%, in the first half of 2013, the company showcases modest financial improvement, thereby paving the way for enhancing operating leverage.

While Marsh & McLennan carries a Zacks Rank #3 (Hold), Moody’s carries a Zacks Rank #2 (Buy).

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