OREANDA-NEWS. Fitch Ratings has assigned AXA S. A.'s USD850m undated subordinated notes a 'BBB' rating.

KEY RATING DRIVERS

The notes are rated three notches below AXA's 'A' Issuer Default Rating (IDR), two for a recovery assumption of "Poor" and one for moderate non-performance risk. The notes are issued by AXA under a EUR15bn euro medium term note (EMTN) programme. The proceeds are being used to pre-refinance part of AXA's outstanding debt.

According to the terms and conditions, the notes are expected to qualify for Tier 2 capital recognition under Solvency II. The notes receive 100% equity credit in Fitch's Prism factor-based capital model. The notes are treated as 100% debt in Fitch's financial debt leverage calculation.

Fitch views the issue as neutral for AXA's financial debt leverage, fixed-charge coverage and capital adequacy metrics, as the new notes are issued for refinancing purposes.

The issue will lengthen the maturity profile of the group's financial debt. Moreover, in Fitch's view, the issue further underlines AXA's financial flexibility, by alleviating refinancing pressure in the medium term.

RATING SENSITIVITIES

The notes' rating is subject to the same sensitivities that may affect AXA's Long-Term IDR (for more details, see 'Fitch Affirms AXA Entities' IFS at 'AA-'; Outlooks Stable' dated 28 June 2016 at www. fitchratings. com).

Fitch rates AXA as follows:

-Insurer Financial Strength Rating of core insurance entities: 'AA-'; Outlook Stable

-IDR of AXA S. A.: 'A'; Outlook Stable