Bupa Successfully Raises 500 Million Euros

In this iPMI Global Insights article, International Health Insurance 2023 report author, Ian Youngman , takes a look at the Bupa 7 year Euro bond. According to Youngman,?the massive interest from French and German investors in a UK insurer is a huge boost of confidence.

• Bupa has successfully launched a 7 year Euro bond.
• Bupa Finance plc has raised EUR 500 million.
• Bupa has successfully launched and priced EUR 500 million 5.00 per cent fixed rate notes due 12 October 2030 (the Senior?Notes) to be issued by its subsidiary, Bupa Finance plc.
• Bupa guarantees the Senior Notes.
• A Eurobond is?a fixed-income debt instrument that allows entities to raise funds in a foreign currency via a long-term bond ranging from 5 to 30 years.
• The word euro stands for the currency in which the bond is denominated and not euro currency in particular.
• A senior bond is debt that takes priority over other unsecured or otherwise more junior debt owed by the issuer.
• A senior bond has a higher priority than another bond's claim to the same class of assets in case of a default or bankruptcy.
• The Senior Notes have a maturity date of 12 October 2030.
• The Senior Notes are unconditionally and irrevocably guaranteed by The British United Provident Association Limited.
• Interest on the Notes is payable in equal instalments annually in arrear on 12 October.
• The first payment of interest will be made on 12 October 2024.
• Unless previously redeemed or purchased and cancelled, the Notes will be redeemed on 12 October 2030.
• The Notes will constitute unsecured obligations.
• Unsecured senior debt is not backed by collateral.
• The insurance company had until now favoured sterling – its domestic currency – and has a combined ￡1.65bn of senior, Tier 2 and RT1 bonds outstanding, according to IFR data. Bupa has a ￡ 300 million fixed rate note maturing in April 2024.
• So, euro was the next natural step in terms of diversification.
• The seven-year bond extends their maturity profile from the senior 2027 they've got.
• The lead managers were?Barclays, BBVA, BNP Paribas, HSBC and Santander.
• Fitch Ratings has assigned Bupa Finance Plc's proposed euro-denominated senior unsecured notes a 'BBB+' rating.

Analysis

• OK- it sounds an esoteric finance story that only financial nerds would get or be interested in.
• In reality the massive interest from French and German investors in a UK insurer is a huge boost of confidence.
• That the road show happened after the announcement of the deal in India – showing Bupa’s global ambition- is not a coincidence.
• The success and growth of the Spanish arm needs more Euro finance.
• As an insurer, slightly longer-dated works for them and seven-year works quite nicely in terms of maturity on the euro side as well.

What Next?

• Proceeds have been earmarked for general corporate purposes, including the refinancing of debt such as Bupa's ￡300m April 2024 senior bond.
• There are many things Bupa can spend the money on including expansion in Spain, India and South America.

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