OREANDA-NEWS. Fitch Ratings has assigned Old Mutual Life Assurance Company South Africa's (OMLACSA; AAA(zaf)/Stable) ZAR2.061bn issues of subordinated debt securities a final rating of 'AA(zaf)'.

The notes are rated two notches below OMLACSA's National Long-term Rating of 'AAA(zaf)' to reflect their subordination and loss absorption features, in line with Fitch's notching criteria.

The assignment of the final rating follows the completion of the bond issue and receipt of documents conforming to the information previously received. The final rating is the same as the expected rating assigned on 13 March 2015.

KEY RATING DRIVERS
The unsecured subordinated callable securities were issued in four tranches, as follows:

- ZAR537m floating rate notes paying a coupon of three-month JIBAR + 230bps and maturing on 19 March 2025. The notes are callable after five years.
- ZAR425m fixed rate notes paying a coupon of 9.76%pa semi-annually in arrears and maturing on 19 March 2025. The notes are callable after five years.
- ZAR409m fixed rate notes paying a coupon of 10.32%pa semi-annually in arrears and maturing on 19 March 2027. They are callable after seven years.
- ZAR690m fixed rate notes paying a coupon of 10.955%pa semi-annually in arrears and maturing on 19 March 2030. The notes are callable after ten years.

All four tranches have a step-up in the coupon after their respective first call dates. The step-ups range from 115 bps to 150bps.The notes include a mandatory interest deferral feature which is triggered when the company's capital level falls below the regulatory capital requirement.

According to Fitch's methodology, this subordinated bond is classified as 100% capital due to regulatory override within Fitch's risk-based capital calculation and is classified as 100% debt for the agency's financial leverage calculations.

RATING SENSITIVITIES
The ratings on the subordinated debt securities are notched down from the issuer's rating and are therefore sensitive to changes in OMLACSA's National Long-term rating.