Fitch: ING U.S. IPO, Debt Sale Further Restructuring Process
ING U.S.’s $1.3 billion initial public offering (IPO) and junior sub debt sale are significant steps in the restructuring process of becoming an independent public company, according to Fitch Ratings. The IPO provides the company with increased funding flexibility, distribution awareness and access to capital. Fitch currently rates ING U.S. and its insurance subsidiaries on a stand-alone basis. Both transactions are credit neutral for the BBB rated entity but they are likely to have long-term positive ramifications for the credit.
The majority shareholder of ING U.S. is ING Groep N.V. (ING Group), a publicly traded global banking and insurance group located in the Netherlands, with a strong franchise in a number of countries in Europe and Asia.
Fitch views ING U.S.’s debt servicing capacity as modest, but improving. As an independent company, ING U.S. will largely depend on dividend payments from regulated and non-regulated operating subsidiaries as well as cash at the holding company to meet interest payments and other obligations.
ING US’s remaining parental ties include letter of credit facilities provided by ING Bank which have been significantly reduced and replaced by third party providers. The remaining facilities are now on an arms-length basis. We expect leverage to remain around management’s stated target of 25%, in line with expectations for the current rating category.
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