XL Places $250 Million in Convertible Bonds

Bermuda-based XL Capital Ltd. announced that it had privately placed $250 million worth of convertible debentures to fund its repurchase of approximately $66.4 million worth of its common stock and for general corporate purposes.

The institutional buyer wasn’t named, but XL indicated that an additional $37.5 million worth of the bonds could be acquired to cover over allotments. The securities carry a 2.875 percent yield to maturity, and may be converted to XL common shares at the rate of $107.07, approximately a 30 percent premium over XL’s recent share price between $80 and $85 per share.

Standard & Poor’s rated the convertible debentures ” single-‘A’-plus, noting that the rating was “based on XL’s extremely strong capital adequacy, focused strategy, and diversified earnings stream as well as the appropriate financial leverage of XL and its insurance subsidiaries.”

The company also announced that it intends to make a further placement of approximately $500 million worth of long term debt for general corporate purposes, to retire existing debt, to repurchase its shares, and possibly for acquisitions.