CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned an expected rating of 'BBB(EXP)' to Voya Financial, Inc.'s (Voya) $500 million issuance of 3.65% senior notes due June 13, 2026 and $300 million issuance of 4.8% senior notes due June 13, 2046. The offering is expected to close on June 13, 2016.
KEY RATING DRIVERS
This new issue is rated equivalent to the ratings of Voya's existing senior debt. Proceeds from this new issue will be used to fund Voya's proposed cash tender offer for up to $800 million of currently outstanding debt. Financial leverage was approximately 22% at March 31, 2016, unchanged from year-end 2015.
Fitch affirmed Voya's and its insurance operating subsidiaries ratings on April 7, 2016. The Rating Outlook is Stable. For more details, see Fitch's press release at www.fitchratings.com.
RATING SENSITIVITIES
The key rating triggers that could result in an upgrade include:
--Continued growth in operating profitability that leads to an improvement in operating ROE to over 11%;
--Sustained maintenance of GAAP adjusted operating earnings-based interest coverage of more than 10x;
--Private sale of closed-block book at good value with boost to capitalization and reduction in volatility and risk;
--Reported RBC above 450% and financial leverage below 20%.
The key rating triggers that could result in a downgrade include:
--A decline in reported RBC below 375%;
--Financial leverage exceeding 30%;
--Significant adverse operating results that lead to GAAP adjusted operating earnings-based interest coverage below 6x;
--Material reserve charges required in the company's insurance/variable annuity books.
The rating of the Voya Holdings Inc. notes is directly linked to the credit quality of ING Group, the guarantee provider. A change in Fitch's assessment of the credit quality of ING Group would automatically result in a change of the rating on the Voya Holdings Inc. notes. Any change in Fitch's view on the contract of guarantee, or deterioration in the credit quality of the counterparties may result in a downgrade of the notes.
FULL LIST OF RATING ACTIONS
Fitch has assigned the following expected ratings:
Voya Financial, Inc.
--3.65% senior notes due June 13, 2026 'BBB(EXP)';
--4.8% senior notes due June 13, 2046 'BBB(EXP)'.
Fitch currently rates Voya and its subsidiaries as follows:
Voya Financial, Inc.
--Long-term Issuer Default Rating (IDR) 'BBB+';
--5.5% senior notes due July 15, 2022 'BBB';
--2.9% senior notes due Feb. 15, 2018 'BBB';
--5.7% senior notes due July 15, 2043 'BBB';
--5.65% fixed-to-floating junior subordinated notes due May 15, 2053 'BB+'.
Voya Retirement Insurance and Annuity Company
Voya Insurance and Annuity Company
ReliaStar Life Insurance Company
ReliaStar Life Insurance Company of New York
Security Life of Denver Insurance Company
--IFS 'A'.
Equitable of Iowa Companies, Inc.
--Long-term IDR 'BBB+'.
Equitable of Iowa Companies Capital Trust II
--8.424% Trust Preferred Stock 'BB+'.
Peachtree Corners Funding Trust
--$500 million of 3.976% pre-capitalized trust securities due 2025 'BBB'.
Voya Holdings Inc.
--7.25% senior notes due Aug. 15, 2023 'A+';
--7.63% senior notes due Aug. 15, 2026 'A+';
--6.97% senior notes due Aug. 15, 2036 'A+'.
Date of Relevant Rating Committee: April 7, 2016
Additional information is available on www.fitchratings.com
Applicable Criteria
Insurance Rating Methodology - Effective Sept. 16, 2015 to May 17, 2016 (pub. 16 Sep 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871172
Additional Disclosures
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005717
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.