Sava Re published an announcement in which they state that certain pieces of information published in the articles by Slovenian media relating to their subordinate bond issue are inaccurate and misleading.
Sava Re published an announcement on the Ljubaljana Stock Exchange regarding the newspaper article published in the Delo daily newspaper under the title “Why do state-owned companies pay more for loans” and the article published in the Delo online edition “Brothers in business and other accusations for Petrol”, both articles published yesterday.
Sava Re responds that certain pieces of information published in the above articles relating to thier subordinate bond issue are inaccurate and misleading.
In that regard, the company states the following:
In October 2019, Sava Re issued Tier II eligible subordinated bonds worth EUR 75m, which count towards the Company’s additional capital. The interest rate of the subordinated bonds is not 4.6%, as stated in both articles, but a fixed annual interest rate of 3.75% for the first 10 years. The bond issue matures in 20 years; however, Sava Re may opt to redeem the bonds early, in November 2029. If Sava Re opts against the first call after ten years, the annual interest rate thereafter will be a three-month Euribor plus 4.683%. To read more about Sava Re’s Tier II issuance click here.
The company further states that they must publicly deny that the price (interest rate) is of secondary importance to the issuer.From the day the book of payments into the subordinated bonds was opened, Sava Re managed to lower the price to the final rate of 3.75% because of the large demand from international and Slovenian investors. Sava Re decided for a listing on the Luxembourg Stock Exchange because it assessed that the Slovenian market was too small for larger subordinated bond issues. For this reason, the Sava Re bonds were predominately purchased by international investors.
In their response Sava Re further states that, it is important to emphasize that subordinated bonds have a higher required yield, by their nature, because they are subordinated to the ordinary liabilities of the Company in case of bankruptcy or liquidation and count towards their additional capital (Tier II capital under Solvency II). Therefore, Sava Re deems inconsistent that the article compares the yield of subordinated bonds to the average interest rate on corporate loans above EUR 1m as published by the Bank of Slovenia (1.8% for Slovenia and 1.1% for the EMU), as the latter includes both secured and unsecured loans.
Sava Re finally adds that they have publicly announced their intention to use the proceeds for general corporate purposes of the Sava Insurance Group and for the optimization of their capital structure – the subordinated bond issue of Sava Re is by no way intended for their “…owners or any other “related” parties, let alone any future – target owners”.
