[Edaily Marketin Reporter LEE GEON-EOM ] Global credit rating agency Fitch Ratings announced on the 12th (local time) that it has assigned an ‘A+’ credit rating to the U.S. dollar-denominated subordinated securities to be issued by Samsung Life Insurance(032830). Samsung Life Insurance’s Issuer Default Rating (IDR) and rating outlook are ‘AA-’ and ‘Stable,’ respectively.

These bonds will be issued as direct, unsecured subordinated debt of Samsung Life Insurance. Samsung Life Insurance plans to use the proceeds for general corporate purposes and to strengthen its regulatory capital.

The bonds’ subordinated status was the key factor in this rating assignment.

Fitch stated, “Reflecting the assumption that the recovery rate in the event of a default would be ‘below average,’ we assigned a credit rating to these bonds that is one notch lower than Samsung Life Insurance’s issuer default rating (AA-),” adding “While these bonds are senior to subordinated debt such as preferred and common stock, they rank lower in the repayment hierarchy than all other senior and subordinated debt, excluding parity debt,” the agency explained.

Fitch assessed the non-performance risk as “Minimal” and therefore did not apply any further downgrades. The analysis indicates that the likelihood of the interest suspension clause being triggered is low unless Samsung Life Insurance faces an extreme financial crisis. Under the terms of the issuance, Samsung Life Insurance has the right to suspend all, rather than just a portion, of the dividends (interest payments) on the securities.

The bond’s initial maturity is set at 30 years. Unless the issuer exercises its call option, the maturity will automatically extend by 30 years. The bond includes a step-up clause whereby the interest rate increases after 10 years, and the call option can be exercised starting five years after issuance.

Fitch projected that “even following this bond issuance, Samsung Life Insurance’s consolidated financial leverage will remain well below 10%, and its fixed-cost coverage ratio will exceed the requirements for this credit rating.”

It added, “Samsung Life Insurance’s capital strength will remain robust,” but noted that “the company remains exposed to volatility in the unrealized gains or losses on its holding of SamsungElectronics (AA-, Stable) shares.”