Alleghany Corporation (Y - Free Report) announced the pricing of $500 million aggregate principal amount of senior unsecured notes. The notes carry an interest rate of 3.625% and are scheduled to mature in 2030.
The company aims to deploy the net proceeds for general corporate purposes, which may include the repayment of existing debt.
The company issued senior notes amid a low interest rate environment to get hold of more funds and enhance financial flexibility without affecting its liquidity. Alleghany maintains a strong balance sheet and had ample liquidity during the first quarter of 2020.
As of Mar 31, 2020, total debt of the company was about $1.5 billion, down 13.5% from 2019 end. The debt-to-capital ratio on Mar 31, 2020 was 16.2%, down 40 basis points from 2019 end and better than the industry average of 19.6. The debt level of the company has been decreasing over the last few years and thus its debt to capital has been improving. Nonetheless, the latest offering will increase the debt-to-capital ratio by 420 basis points.
By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.
Recently, Radian Group Inc. (RDN - Free Report) offered 6.625% $525 million senior unsecured notes to capitalize on the low interest rate environment.
Shares of this Zacks Rank #4 (Sell) property and casualty insurer have lost 33.8% in the past year compared with the industry’s decline of 19.8%.
Stocks That Warrant a Look
Some better-ranked stocks from the same space are The Allstate Corporation (ALL - Free Report) and The Progressive Corporation (PGR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allstate surpassed estimates in each of the last four quarters, with the average positive surprise being 18.45%.
Progressive surpassed estimates in three of the last four quarters, with the average positive surprise being 15.58%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
Click Here, See It Free >>