Wednesday, April 17, 2024

Clifford advises MAPFRE on €500m notes issuance

Clifford Chance has advised MAPFRE on its successful €500 million subordinated notes issue intended to qualify as Tier 3.


MAPFRE has successfully placed the notes of an 8-year subordinated bond, for a total of €500 million, with a fixed interest rate set at 3.009 percent. The funds deriving from this transaction will be used to further strengthen the Group’s financial flexibility, in addition to diversifying its sources of financing.

“This issuance serves as yet another illustration of the confidence institutional investors have in MAPFRE. We continue optimizing our debt position, and we are doing so in very satisfactory financial conditions, even within a complex market context such as the current one,” said Fernando Mata, CFO and member of the board of the company. It is the first Tier 3 subordinated issuance by a Spanish insurer

The success of the transaction can be seen in the reduction of the interest paid with respect to previous operations (3.009% vs. 4.125% in August 2018) and in the high level of demand, which exceeded €1.9 billion, with broad diversification, which allowed for the bond to be placed among more than 90 institutional investors in several European countries, highlighting France and the UK.

The issuance has been directed exclusively at institutional investors, with retail investors being expressly excluded, as is normal practice with transactions of this nature. Mutual fund managers represent the vast majority of the investors that have participated in the placement (49 percent of the total), followed by insurers and pension fund managers (29 percent).

The notes will qualify as tier 3 instruments of MAPFRE pursuant to the applicable solvency regulation, thus reinforcing MAPFRE’s solvency and financial strength levels. The notes will be quoted on the AIAF market, upon receipt of authorization from the Spanish Securities and Exchange Commission (CNMV).

Despite the current challenging macroeconomic and socio-political situation and the novelty of the instrument, investor interest has led to the success of Mapfre’s issue. The notes will be listed on the Spanish AIAF regulated market.

The Clifford Chance´s team advising MAPFRE was led by Capital Markets partner Yolanda Azanza, with the support of Madrid associates Francisco Pizarro and Enrique País. The team was assisted by associates Miguel Barredo and Juan Valcárcel from Clifford Chance’s Insurance practice.

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