Sagicor Financial Company Limited | Fixed Income Analysis

Recommendation

SFC operates in an industry that is expected to grow, at least over the medium-term. This coupled with the group’s strong management team and the group’s efforts to grow their operations in an investment grade country, i.e., the United States of America, reflects favourably on the future outlook of SFC. However, the growth in the United States operation is not the only factor contributing to SFC’s positive outlook. Additionally, SFC has a strong presence in the Caribbean insurance industry, an industry that accounts for only 3% of global premiums and an especially strong presence in Jamaica where the insurance penetration rate was estimated at 4.4% in 2019, as stated earlier, highlighting a sizeable potential addressable market. Lastly, SFC’s credit ratios are strong. Given the underlying economics of SFC’s business operations coupled with the positive outlook of the industry, we rate the SFC 5.3% 2028 bond as OVERWEIGHT. The rationale for our view on this bond is that investors who participate can find comfort in SFC’s growing operations in an investment grade country, having a strong brand and presence in a growing industry, strong capital adequacy ratios that stood the test of the downturn in FY2020 caused by the pandemic, as well as their credit rating and access to the capital markets.

Industry: Diversified Financials
Bond Name SFCCN 5.30% 2028
Credit Rating (Fitch)
BB Credit Rating (S&P)
BB-
BB+
Maturity May 13, 2028
Issue Size US$550 Mn
Rank Senior Unsecured
Price (Bid/Ask) (Source: Bloomberg) US$92.066/ US$93.905
Yield to Maturity (Bid/Ask) 6.991%/6.584 %
Recommendation Overweight

Sagicor Financial Company Limited | Fixed Income Analysis

Market News Signup

Signup to get updates to your inbox
  • This field is for validation purposes and should be left unchanged.

Keep Reading...

Let's Make Your Money Work For You