MetLife Vends $1.5B Notes - Analyst Blog

On Tuesday, MetLife Inc. (MET) sold off three-part senior notes worth approximately $1.5 billion in the 144A private placement market. According to Reuters, MetLife Global Funding I vended off three-year floating-rate notes and three-year fixed-rate notes of $500 million each, along with five-year notes worth $500 million.

The $500 million three-year floating rate notes, issued at a price of $100.00, mature on January 10, 2014.  These three-year notes are projected to have a coupon and yield rate of 75 basis points (bps) over the existing 3-month LIBOR rate. Interest on the notes is payable quarterly, in equal instalments, commencing January 4, 2011.

The second part includes $500 million notes at an issue price of $99.957, maturing on January 10, 2014.  These three-year fixed rate notes are projected to have a spread of 100 bps over the US Treasuries, bearing a fixed interest rate of 2.0% and yield rate of 2.015%. Interest on the notes is payable semi-annually, in equal instalments, commencing July 10, 2011.

The final part of $1.5 billion notes includes $500 million at an issue price of $99.858, maturing on January 11, 2016.  These five-year notes are projected to have a spread of 115 bps over the US Treasuries, bearing a fixed interest rate of 3.125% and yield rate of 3.156%. Interest on the notes is payable semi-annually, in equal instalments, commencing July 11, 2011.

All the three set of notes carry a rating of “Aa3” and “AA-” from Moody's Investor Service of Moody's Corp. (MCO) and Standards & Poor's, respectively.

Further, MetLife appointed Bank of America Merrill Lynch of Bank of America Corp. (BAC), UBS AG (UBS), Deutsche Bank AG (DB) and JPMorgan Chase & Co. (JPM) as the joint book-running managers for the sale.

This is not the first instance when MetLife has engaged in note selling. Earlier, during September 2010, a couple of subsidiaries of MetLife announced the sale of senior notes worth approximately $2 billion. While MetLife Global Funding I vended off its 5-year senior notes worth $850 million, MetLife Institutional Funding II retired $1.35 billion of its notes in a two-part sale, in the 144A private placement market. Further, during September 2009, the company sold fixed-rate funding agreement-backed notes worth $1 billion, the proceeds of which were used for general corporate purposes.

Although the details and usage of the note issue are not disclosed, we believe it will help supplement the company's funding for its expansion and growth plan, although additional debt raises concern over the company's capital leverage. The notes issue will further extend MetLife's international profile and improve its ability to access the international debt capital markets to support the growth of its operations.

 
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