Listed insurance firm Manulife Financial Corp. is raising $1.2 billion in principal amount through the issuance of 10-year subordinated debentures that carry 5.409 percent fixed rate until March 10, 2028.
Until its maturity in March 2033, interest rate on the Manulife subordinate debentures will be a 1.85 percent premium over the daily compounded Canadian Overnight Repo Rate Average, which currently stands at 4.5 percent.
Debentures, like bonds, are long-term debt instruments. But unlike bonds, debentures are not secured by collateral or physical assets.
Manulife, which is listed in the stock exchanges of Toronto, Hong Kong, New York and the Philippines, may, if allowed by regulators, redeem the debentures in March 2028 at a price equal to par value along with accrued and unpaid interests.
The offering is being done on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, Scotiabank and TD Securities. The offering is expected to close on March 10, 2023.
Manulife intends to use the net proceeds from the debentures for general corporate purposes, including investment in subsidiaries and potential future redemptions of existing securities.
