Direct Line Group issues debt to help pay £1bn dividend to the bank
Direct Line Insurance Group today revealed it will initially pay 9.25% on its £500m bond.
The bond issue will allow Direct Line to pay a £700m dividend to the bank once it has completed its flotation. Direct Line has already paid £300m in dividends to the taxpayer-owned bank, meaning its total payment will eventually be £1bn.
The floating/fixed rate for the guaranteed subordinated notes are due in 2042. The bond is guaranteed by UK Insurance Limited, the main underwriting group.
The notes will be issued on 27 April. The coupon payments at 9.25% will be semi-annual and are rated at BBB+ by Standard and Poor’s and Baa1 by Moody’s Investor Services. The notes are intended to be treated as tier 2 capital.
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