Zacks Analyst Blog Highlights: Prudential Plc, American International Group Inc., Credit Suisse Group, HSBC Holdings Plc and JPMorgan Chase & Co. - Press Releases
For Immediate Release
Chicago, IL – March 4, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Prudential Plc (PUK), American International Group Inc. (AIG), Credit Suisse Group (CS), HSBC Holdings Plc (HBC) and JPMorgan Chase & Co. (JPM).
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Here are highlights from Wednesday’s Analyst Blog:
Rating Concerns for Prudential Plc
Following the announcement by Prudential Plc (PUK) to purchase Asian life-insurance unit American International Assurance (AIA) from American International Group Inc. (AIG), Fitch Ratings has become cautious with regard to execution risks that the deal may bring along.
The value of the deal, estimated at approximately $35 billion, is greater than the company’s market value, which is $23 billion at present.
Prudential Plc, which anticipates completing the deal by third quarter of 2010, expects to pay $25 billion in cash, $8.5 billion in face value of equity and equity-linked securities and $2 billion in face value of its preferred stock. Prudential Plc is considering a rights offering to raise $20 billion to fund the AIA deal. Credit Suisse Group (CS), HSBC Holdings Plc (HBC) and JPMorgan Chase & Co. (JPM) are advising Prudential Plc on the deal.
Fitch is concerned that the new debt funding in connection with the deal would exert downward pressure on the company’s interest coverage ratio, which might cause a ratings downgrade. Currently, the company has been conferred with an “AA-" long-term issuer default rating by Fitch, which is considered to be the fourth highest investment grade.
Prudential Plc operates in 13 Asian markets where it has more than 11 million life customers. Asia, which accounted for 44% of Prudential Plc's profits in 2009, is also seen as the engine of the group's future growth. The deal will transform Prudential Plc into the ranks of the world's largest insurers and make it an Asian powerhouse. Asia would account for three-quarters of the merged company's value of new business.
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