We’ve added a new Genworth USD fixed rate bond to our DirectBonds list, with an indicative yield to worst of 8.71%. The bond is available to wholesale investors in minimum face value parcels of USD10,000
Genworth Financial, Inc. (Genworth) is a leading Fortune 500 insurance holding company, helping families achieve homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. It has a market capitalisation of USD2bn as at 8 November 2016.
The company operates through five segments: U.S. Mortgage Insurance, Canada Mortgage Insurance, Australia Mortgage Insurance, US Life Insurance and a runoff division. In FY15 the company produced 87.5% of revenue in the US, 6.6% in Canada, 5.5% in Australia and the remainder in other countries.
In October 2016, it was announced that China Oceanwide entered into a definitive agreement to acquire all of Genworth’s outstanding shares for approximately USD2.7bn. Genworth expects the takeover to close prior to 31 August 2017 however it is subject to shareholder and regulatory approvals.
If the deal closes, we believe it would be credit positive as China Oceanwide will contribute USD525m of cash to the US life insurance businesses for regulatory approval of a restructuring plan to separate its long term care business. Refinancing risk would also be reduced with China Oceanwide committing another USD600m of cash to address Genworth’s debt maturing in 2018. However the acquisition is subject to regulator agreements across multiple jurisdictions including: multiple US states (DE, NC, NY and VA), China, Canada, Australia and Mexico as well as the Committee On Foreign Investment In The United States (CFIUS).
Given the various uncertainties regarding a business restructure, the potential acquisition and how these relate to Genworth’s funding and risk profile, we would expect a high level of volatility, especially in a “no deal” scenario.
This USD bond is fixed rate and available to wholesale clients only, in minimum parcels of USD10,000 and USD1,000 denominations thereafter.
| Security | Rank | Maturity | Yield to worst* | Factsheet link |
| Genworth Holdings Inc., subsidiary of Genworth Financial Inc. – USD 2021 | Senior unsecured | 24 September 2021 | 8.71% | Factsheet
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Pricing is indicative as at 8 November 2016 but subject to change.
Please note the factsheet is a summary only and should not be considered as credit research.
*Note: Yield to worst is the lowest yield an investor can expect when investing in a callable bond.