News Column

Fitch Rates Sun Life Financial Inc.'s C$250MM Subordinated Debt Issue 'BBB+'

May 14, 2014



CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned a 'BBB+' rating to yesterday's issuance of C$250 million subordinated unsecured 2.77% debentures due 2024 by Sun Life Financial Inc. (TSE, NYSE: SLF).

The new notes' ratings are equivalent to the ratings on SLF's existing subordinated unsecured debt. Fitch anticipates that the net proceeds will be used for general corporate purposes, which may include investment in subsidiaries and repayment of debt.

SLF's financial leverage was 12.7% at March 31, 2014. Pro forma leverage including the additional debt and the anticipated redemption of C$250 million of preferred shares scheduled for June 30, 2014 is 13.9%. The leverage increase reflects the loss of equity credit that Fitch assigned the preferred shares. The pro forma financial leverage remains within Fitch's parameters for the rating category.

Fitch views SLF's debt service coverage (on a Canadian IFRS earnings basis excluding the net impact of market factors) of 6.6x for 2013 and 7.6x during the first quarter of 2014 as low for the rating level. Fitch expects fixed-charge coverage to remain near this level over the intermediate term but to improve in late 2014 and 2015. However, Fitch believes that under Canadian regulations, SLF has greater flexibility to upstream dividends from operating subsidiaries without regulatory approval than most U.S. peers.

Rating sensitivities for Sun Life Financial Inc. are shown in Fitch's report, "Sun Life Financial Inc. (And Insurance Subsidiaries), dated March 12, 2014.

Fitch rates the following:

Sun Life Financial Inc.

--C$250 million subordinated unsecured 2.77% debentures due 2024 'BBB+'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Nov. 2013).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723072

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=830160

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Bruce E. Cox

Director

+1-312-606-2316

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

or

Secondary Analyst

Tana M. Higman

Director

+1-312-368-3122

or

Committee Chairperson

James Auden

Managing Director

+1-312-368-3146

or

Media Relations

Brian Bertsch, +1-212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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