OREANDA-NEWS. February 22, 2016. Fitch Ratings has assigned a rating of 'BBB+' to Sun Life Financial Inc.'s (SLF) C\\$350 million issuance of 3.1% fixed/floating subordinated unsecured debentures due 2026.

KEY RATING DRIVERS

This new issue is rated equivalent to the ratings of SLF's existing subordinated unsecured debt. The proceeds will be used to partially fund the previously announced acquisition of the employee benefits business of Assurant, Inc. and may also be used for general corporate purposes, which may include investments in subsidiaries.

SLF's financial leverage ratio (FLR) was modest at 13% and total leverage at 22.1% as of Dec. 31, 2015. Pro forma FLR and total leverage remain within Fitch's expectations for the rating category at 14.2% and 23.2%, respectively.

Fitch affirmed the ratings of SLF and its insurance operating subsidiaries on Jan. 26, 2016.

RATING SENSITIVITIES

The key rating triggers that could result in an upgrade include:

--Consistent maintenance of fixed-charge coverage, excluding the net impact of market factors, of over 10x;
--Sustained improvement in underlying and reported profitability with an ROE maintained above 12%;
--Stable balance sheet fundamentals evidenced by an MCCSR ratio at or above 220% and financial leverage below 20%.

The key rating triggers that could result in a downgrade include:

--A decline in fixed-charge coverage, excluding the net impact of market factors, to below 6x;
--A sustained drop in the company's risk-adjusted capital position, including the MCCSR ratio falling below 200%;
--An increase in financial leverage to over 25% or an increase in total leverage to over 35%;
--A large acquisition that involves execution and integration risk or impacts the company's leverage and capitalization.

FULL LIST OF RATING ACTIONS

Fitch assigns the following rating:

--3.10% subordinated debentures due 2026 'BBB+'.

Fitch currently rates the SLF entities as follows:

Sun Life Financial, Inc.
--Long-term Issuer Default Rating (IDR) 'A';
--5.7% senior notes due 2019 'A-';
--4.57% senior notes due 2021 'A-';
--4.95% senior notes due 2036 'A-';
--4.38% subordinated debentures due 2022 'BBB+';
--5.59% subordinated debentures due 2023 'BBB+';
--2.77% subordinated debentures due 2024 'BBB+';
--2.60% subordinated debentures due 2025 'BBB+';
--5.4% subordinated debentures due 2042 'BBB+';
--4.75% noncumulative preferred shares, series 1, 'BBB-';
--4.8% noncumulative preferred shares, series 2, 'BBB-';
--4.45% noncumulative preferred shares, series 3, 'BBB-';
--4.45% noncumulative preferred shares, series 4, 'BBB-';
--4.5% noncumulative preferred shares, series 5, 'BBB-';
--2.275% noncumulative preference shares series 8R, 'BBB-';
--2.075% (floating rate) noncumulative preference shares series 9QR, 'BBB-';
--3.9% noncumulative preference shares series 10R, 'BBB-';
--4.25% noncumulative preference shares series 12R 'BBB-'.

Sun Life Assurance Co. of Canada
--Insurer Financial Strength (IFS) rating 'AA-';
--Long-term IDR 'A+';
--6.30% subordinated notes due 2028 'A'.

Sun Life Capital Trust
--Sun Life ExchangEable Capital Securities (SLEECS), 7.093% series B, 'A-';
--Sun Life ExchangEable Capital Securities (SLEECS), 5.863% Series 2009-1, 'A-'.

The Rating Outlook is Stable.