Loews Corporation has priced a public offering of $1 billion aggregate senior notes. Out of this, $500 million carries an interest rate of 2.625% and is scheduled to mature in 2023. The remaining $500 million carries an interest rate of 4.125% and is scheduled to mature in 2043.
Loews intends to use the net proceeds from the issuance for general corporate purposes.
As of Mar 31, 2013, the debt-to-capital ratio for Loews was 0.28x which represented a deterioration of 1 percentage point from 0.27x at 2012 end. With the issuance of the $1 billion debt, the debt-to-capital ratio is expected to deteriorate further by 2 percentage points to approximately 0.30x.
The new issuance would require Loews to pay an annual interest of $33.8 million. Nevertheless, the company’s solid operational performance generates enough funds to service the debt uninterruptedly. Its interest expense in the first quarter of 2013 reduced 2.7% year over year to $108 million which is expected to increase with the issuance of the debt.
Recently, another insurer, Prudential Financial Inc. (PRU - Free Report) declared that on Jun 15, 2013, it will redeem all of its outstanding 9% junior subordinated notes worth $920 million, which are scheduled to mature in 2068. On the same date, Prudential will pay a redemption price of $25 per $25 note to its shareholders of record as of Jun 15, 2013.
Loews currently carries a Zacks Rank #4 (Sell). Among other stocks, AEGON N.V. (AEG - Free Report) and Cigna Corp. (CI - Free Report) carry a favorable Zacks Rank #1 (Strong Buy) and are worth noting.