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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 - Analyst Report ) , Employers Holdings Inc. ( EIG - Snapshot Report ) and Seabright Holdings, Inc. ( ) .
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.
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