Manulife Financial Corporation (MFC) completed its offering of $871 (C$900) million principal amount of medium-term notes. The notes will bear an interest of 4.079% maturing on August 20, 2015. The notes were issued under its medium-term note program.
The company will file in Canada a pricing supplement to its amended and restated short form base shelf prospectus dated May 8, 2009 (amending and restating its March 30, 2009 short form base shelf prospectus) and prospectus supplement dated April 21, 2009 in respect of this issue.
Manulife intends to use the net proceeds for general corporate purposes, including investments in subsidiaries.
At the end of the second quarter of 2010, the company had $3.2 (C$3.3) billion in debt balance, lower than the year-ago level of $4.2 (C$4.3) billion. During the second quarter, the company’s interest expense, at $256 (C$262) million, was substantially lower than $531 (C$543) million in the prior-year quarter.
With this note offering, the debt level of the company will rise. The company will also have to incur higher interest expense to service the debt.
The Zacks Consensus Estimate for third-quarter 2010 is loss of 15 cents per share. For full years 2010 and 2011, the Zacks Consensus Estimates are, respectively, a loss of 37 cents per share and earrings of $1.79 per share.
Given weak equity market conditions and a lower interest rate environment, we maintain our “Neutral” recommendation on Manulife Financial. The quantitative Zacks #4 Rank (short-term Sell rating) for the company indicates downward directional pressure on the shares over the near term.
Headquartered in Toronto, Canada, Manulife Financial through its subsidiaries operates as a life insurance company. The company also offers reinsurance services. The company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.
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