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Bupa sells £500m of hybrid bonds

UK private medical insurance company Bupa has sold £500 million of hybrid bonds in order to fund acquisitions, according to Business Week.

The company sold 10-year subordinated notes, which are made up of debt and equity. The notes were priced to yield 355 basis points more than gilts.

Bupa group treasurer Gareth Evans told Business Week: “Some of the proceeds will be used to support, in part, our Lux Med and Dental Corporation acquisitions.

“Still, the rationale for the bond issue is to enable Bupa to further enhance its prudent liquidity and solvency capital positions and provide a further buffer for growth opportunities.”

Bupa completed its acquisition of Polish healthcare provider Lux Med Group for €400 million (£342 million) earlier this year and is in the process of acquiring Australia and New Zealand-based Dental Corporation for AUD$347 million (£244 million).

Issuing hybrid bonds allow companies to borrow with a reduced risk of a credit downgrade because ratings firms count 50% of the bonds as equity.

Moody’s gave Bupa’s hybrid bonds a Baa3 rating according to a report on 15 April.


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Posted on: 23/04/2013

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