MET MetLife Inc

Genworth Financial Inc. (GNW) will offer senior unsecured notes worth $350 million bearing a coupon of 7.625% with maturity scheduled in 2021.

Genworth is offering the debentures at 103% of face value to yield 7.184% if held till maturity.

This new offering is in addition to the already existing 7.625% senior notes issued in March 2011 with maturity scheduled in 2021.

Genworth intends to deploy the proceeds from the offering for general corporate purposes including enhancing liquidity at the Genworth holding company level.

Rating agency A.M. Best Co. assigned a debt rating of “bbb-” to the senior unsecured notes. The rating outlook is negative.

Also, rating agencies Standard & Poor's Ratings Services (S&P) has issued a “BBB-” rating to these senior notes and Moody’s Investor Service of  Moody’s Corp. (MCO) assigned a “Baa3” rating to the same.

Genworth ended 2011 with a total debt balance of $4.7 billion, down from $4.9 billion at 2010 end, reflecting a reduction of $0.2 billion over the year. The debt-to-capital ratio was 22.2% at year-end, lower by 410 basis points from 2010 end.

With the issuance of $350 million of debt, the debt-to-capital ratio will increase by 130 basis points.

Also, the company has to dish out additional interest to service the debt. In 2011, the company incurred an interest expense of $507 million, up 10.7% over 2010.

We retain our Neutral recommendation on Genworth Financial. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Based in Richmond, Virginia, Genworth Financial offers a variety of products to customers in areas such as life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists. The company competes with MetLife Inc. (MET) and Prudential Financial Inc. (PRU).

 
GENWORTH FINL (GNW): Free Stock Analysis Report
 
MOODYS CORP (MCO): Free Stock Analysis Report
 
METLIFE INC (MET): Free Stock Analysis Report
 
PRUDENTIAL FINL (PRU): Free Stock Analysis Report
 
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