Annuity Provider Athene Holding LTD Announces New Preferred Issue

Athene Holding LTD (ATH) has announced the issuance of a new fixed-rate reset preferred. The issue will be non-cumulative.

This issue will be rated low investment grade by S&P at BBB-

A fixed-rate reset preferred will trade with a fixed coupon for about 5 years–meaning until 9/30/2025 in this case. After this point the coupon will reset every 5 years at the 5 year treasury rate plus a yet to be announced ‘spread’.

The new issue will trade under ticker ATH-C when it hits the NYSE after trading on the OTC grey market for maybe a week (OTC ticker yet to be announced).

The company currently has a fixed-to-floating rate preferred outstanding plus they have a fixed rate issue outstanding. These issues can be seen here.

The preliminary prospectus can be read here.

mcg was on top of this one.

19 thoughts on “Annuity Provider Athene Holding LTD Announces New Preferred Issue”

  1. The new ATH issue will present an interesting choice, between a preferred tied to 3mL, a preferred tied to 5yT, and a fixed rate. There are also 2 bonds that are not exchange traded but can be bought.

    Anyone looking to buy the new ATH pref should look at all 3, if not all 5.

    It’s also good to listen to Grid on the issue of sub vs parent ratings. Look past “issuer” ratings to the ratings of the entity actually doing the issuing. Read page S-14 of the 424 for this issue to understand. In a holding company structure, a sub can flourish while a parent starves.

    1. Bob, the parent/subsidiary thing is most interesting to me. Mostly because I only know the basic overview mechanics, not the interlocking intricacies and minutia. I do know Pacific Gas and Electric early on considered trying to wall itself off and its other minor subsidiaries from PCG the regulated ute.
      Since the preferreds of PCG reside at subsidiary level and not hold co, this would have been interesting and possibility not good. Ultimately Hold Co decided to go down in flames with subsidiary because in reality the subsidiary for all intent is the hold co revenue stream.

  2. If I were going to be a buyer of this company I would be buying their “ATH+A” all day long. Its a 6.35% coupon and not callable until 6/30/29!!!! Then it has a spread of 4.253% + 3 month libor. Its trading right now at $25.23 with volume today of over 179,000 shares traded. I love issues with long call dates like this one. Coupon is good. The company has on their website stating that they have over $142 BILLION in ASSETS. They have listed the 3 rating agencies as giving them an “A rating”. I probably will not buy it but on the surface it looks good. You can’t buy them all. I’m going to stick to my guns and stay with really high quality names.

    1. Many are saying the exact opposite…and avoiding everything tied to libor. I’ve always told don’t read too much into the companies intentions. But it seems a sign that investors were able to insist on fix vs fixed to float. And the pricing is rich for investors at 3/8’s….but still below the 6.5 to 6 5/8’s projected.
      This issue came to market 364 days after the A’s….which had traded very well until March

    2. with an A RATING what issuers do you assume are high quality? Interested in what your metric is . tia sc

      1. Ask Grid he does a great job with those. And it’s not merely those A rated but those that have consistently traded parallel to A rated’s. I see USB, Entergy, PSA, Gabelli, and Assured Guaranty all offering A rated preferreds. I don’t ‘do’ thousand dollar par preferreds.

        1. If You Prefer, I am not insurance expert and can barely cook soup. But I do know people get tripped up on this. The A ratings are for the subsidiaries. They mean nothing to investors of these preferreds. The A ratings means paying claims ability to customers. The payments come from subsidiaries.
          Look at this link and it shows a cursory overview credit rating between subsidiaries and parent holding company.
          https://ir.athene.com/CustomPage/Index?KeyGenPage=328760

          One can see the holding company rating is lower. This isnt surprising though as most are. Still is decent quality. SA “experts” were getting this all confused with Amtrust debt and their A rating… That was their claims paying subsidiary credit rating, not holding company credit rating which was actually low BB. But they were too dumb to know the difference despite charging for their services with their “investment services”. I dont have an answer for this , but these “off shore” holding companies tend to have to pay higher coupons despite usually decent credit ratings. I dont know. Emotionally I dont trust them and usually dont invest a lot in insurers. No logical explanation can be provided other than emotion which is not a good reason.
          Fitch below shows hold co rating that is pretty recent…So the preferred being a hold co issue not subsidiary is probably that BBB-/BB+ area.
          https://www.fitchratings.com/research/insurance/fitch-rates-athene-senior-notes-bbb-01-04-2020

          1. Haha I thought the poster was questioning A rated preferreds, not A rate insurance companies…so my response was about higher quality bonds. Me, I tend to be a rate ‘ho and predominately deal in the B to BBB+ area. If he’s looking for A rated insurance companies that clearly is a horse of a different color.

            I believe there’s another level of complexity to ATH….and they have some sort of relationship with AHL. Hate to say it , but that reminds me of Maidan and AmTrust

            1. Did I read where Apollo Global Management bought Aspen Insurance Holdings (AHL) back in February 2019? AHL common is no longer trading.

  3. Does Fed also buy non-USA based company debt? From what I see, this company is a Bermuda corp.

    Perhaps being non-US domiciled should lower their standing v/s some of the small bank preferreds issued at better coupons (than say ATH-B which fell to low $24s on this new incoming)

  4. The rate at which these issues are coming out is scary. Fed is willing to lend money for free and buying up all shady bonds/securities then why are these banks/financial companies out to borrow at 5+%? At least it is above my pay scale to understand this 🙂

    1. I think Preferred’s don’t don’t show as a liability on their balance sheets. Im not smart enough to understand why regional banks are doing this

      1. The regional banks are raising preferred because loan loss reserves and expected losses are impacting their equity value and their required bank ratios. Preferred stock counts as equity, so it’s like raising new stock to shore up the balance sheet. It’s of course not a great sign, but expected, showing that small regional banks are going to take hits on loan losses.

    2. Jay R ; I think the banks are like most of us, hoping for the best, but planning for the worst. Besides bolstering their balance sheets some are cutting credit lines. My wife has a Chase Visa card that she opened 30 years ago with a 5K credit line. Over the years Chase has increased it on their own to 12K. Even though she has a FICO score of 850, she got a letter yesterday that stated because she hasn’t used her full credit line the bank “determined” the maximum she would need and they proceeded to cut her limit in half to $6,000. My neighbor who is an engineer with perfect credit and a high six figure salary received a letter from his bank that his HELOC credit line will be reduced by from 100K to 50K and this guy owns his $650K home outright, no mortgage ! I am seeing some of the same things I did in 2008, just a bit of ass covering I guess.

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