OREANDA-NEWS. Fitch Ratings has assigned Old Mutual Life Assurance Company South Africa's (OMLACSA; AAA(zaf)/Stable) ZAR2.479bn subordinated debt securities final ratings of 'AA(zaf)'.

The notes are rated two notches below OMLACSA's National Long-term Rating of 'AAA(zaf)' to reflect their subordination and moderate risk of non-performance, 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 2 September 2015.

The unsecured subordinated callable securities were issued in three tranches, as follows:

- ZAR1,288m floating-rate notes paying a coupon of three-month JIBAR + 225bps and maturing on 14 September 2025. The notes are callable after five years.

- ZAR568m fixed-rate notes paying a coupon of 10.9% per annum semi-annually in arrears and maturing on 14 September 2027. The notes are callable after seven years.

- ZAR623m fixed-rate notes paying a coupon of 11.35% per annum semi-annually in arrears and maturing on 14 September 2030. The notes are callable after ten years.

KEY RATING DRIVERS

All three tranches have a step-up in the coupon after their respective first call dates. The step-ups range from an additional 112.5 bps to 146bps.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, these subordinated bonds are classified as 100% capital due to regulatory override within Fitch's risk-based capital calculation and are classified as 100% debt for the agency's financial leverage calculations.

RATING SENSITIVITIES
The ratings on the subordinated debt securities are sensitive to changes in OMLACSA's National Long-term rating.