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Phoenix Group Holdings pl has successfully completed the initial phase of its deleveraging programme, which includes a significant debt redemption and refinancing exercise. This strategic move is part of the Group's broader goal to repay at least £500 million of debt and achieve a Solvency II leverage ratio of approximately 30% by the end of 2026.
Key Steps in Deleveraging Strategy
On May 3, 2024, Phoenix Group announced its intention to fully redeem its £250 million Tier 2 notes due in 2029, on their first call date of June 13, 2024. This redemption has now been completed, marking a crucial step in reducing the Group’s outstanding debt.
In addition, the Group has opted to refinance $500 million of its outstanding Restricted Tier 1 (RT1) notes, which are callable in early 2025. This was achieved through a tender exercise, followed by the successful issuance of $500 million in new RT1 notes, with a coupon of 8.5%. This prudent refinancing move ensures the Group's financial stability while maintaining annual debt interest costs at a steady level.
Financial Impact and Strategic Benefits
As a result of these actions, Phoenix Group has effectively reduced its outstanding debt by £250 million. Despite this reduction, the Group's annual debt interest costs remain largely unchanged, thereby preserving its strong cash interest cover of approximately six times. This financial maneuver not only supports the Group’s deleveraging goals but also strengthens its overall financial position, aligning with long-term strategic objectives.
Executive Commentary
Commenting on the successful completion of this phase, Andy Briggs, Group CEO of Phoenix Group, said, “Our proactive approach to managing our debt portfolio underscores our commitment to maintaining financial resilience and delivering long-term value for our shareholders. This initial phase of deleveraging marks a significant milestone in our journey towards achieving a more robust balance sheet and optimizing our capital structure.”
Future Outlook
Phoenix Group remains committed to its deleveraging programme, with plans to further reduce debt and improve leverage ratios over the coming years. The Group’s strategic focus on financial prudence and sustainable growth is expected to drive continued success and stability in the evolving financial landscape.
