Munich Re is preparing to issue a subordinated bond. It will be a perpetual bond and callable by Munich Re from ten years after the date of issue. Up to then, it will have a fixed coupon rate and thereafter a floating rate. Under certain conditions, which Munich Re will fulfil with this issue, subordinated bonds are treated by supervisory authorities and rating agencies as equity.
The volume of the issue and other features of the bond, such as coupon rate and offering price, will be determined in a book-building process. This is scheduled to take place – subject to market developments – after a roadshow in the week ending 1 June 2007 to present the issue to institutional investors in several European financial centres. The Company is planning a "benchmark size" issue, which in the euro market includes a volume of €1bn or over.
The transaction is part of Munich Re's active capital management in its Changing Gear programme. "We are following up our words with actions. Raising subordinated capital is one way of optimising our capital structure and hence our cost of capital", said Jörg Schneider, Munich Re's CFO. "In doing this now, we are taking advantage of the favourable capital market environment."
The volume of the issue and other features of the bond, such as coupon rate and offering price, will be determined in a book-building process. This is scheduled to take place – subject to market developments – after a roadshow in the week ending 1 June 2007 to present the issue to institutional investors in several European financial centres. The Company is planning a "benchmark size" issue, which in the euro market includes a volume of €1bn or over.
The transaction is part of Munich Re's active capital management in its Changing Gear programme. "We are following up our words with actions. Raising subordinated capital is one way of optimising our capital structure and hence our cost of capital", said Jörg Schneider, Munich Re's CFO. "In doing this now, we are taking advantage of the favourable capital market environment."
