Rating agency, Fitch, downgraded the international wealth manager, Old Mutual PLC’s long term issuer default rating, it said yesterday.
It said the two-notch downgrade of the group’s non-South African operation, Skandia Life Assurance, reflected the change in Fitch’s view of the credit quality of the as a whole‚ which is driven by its South African business.
Fitch downgraded Old Mutual’s long-term issuer default rating (IDR) from A- to BBB. It also downgraded its senior unsecured debt from BBB+ to BBB-Subordinated debt was downgraded from BBB- to BB.
The agency has also downgraded South Africa’s Old Mutual Life Assurance Company’s subordinated debt from AA to AA- and affirmed its National IFS rating at AAA. The outlooks on the group’s issuer default rating (IDRs) and IFS ratings were stable, it said in a statement.
The rating actions come after the downgrade of South Africa’s Long-term foreign currency IDR to BBB/Stable from BBB+/Negative. The SA downgrade also included the long-term local currency IDR to ‘BBB+’/Stable from ‘A’/Negative.
The bulk of Old Mutual’s IFRS group operating earnings come from South Africa‚ with the remainder largely from the UK.
“The group’s IFS rating is one notch higher than the South African local currency sovereign rating in recognition of Old Mutual’s geographical diversification‚ with a sizeable proportion of earnings generated in the UK and Europe. The additional notch also reflects the group’s ability to share with policyholders potential investment losses on its investments in the South African financial markets‚ and the financial flexibility from being listed on the London Stock Exchange‚” Fitch said in statement.