The Zacks Analyst Blog Highlights: MetLife, Morgan Stanley, Citigroup, Credit Suisse and HSBC Holdings

Sep 06, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 6, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the MetLife Inc. (NYSE: MET-Free Report), Morgan Stanley (NYSE: MS-Free Report), Citigroup Inc. (NYSE: C-Free Report), Credit Suisse AG (NYSE: CS-Free Report) and HSBC Holdings Plc (NYSE: HBC-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

MetLife Remarkets Approx $1B in Debt

Earlier this week, MetLife Inc. (NYSE: MET-Free Report) priced its long-term debentures worth $1.0 billion that are scheduled for remarketing and settlement next week.

Previously, these senior debentures were issued in Nov 2010, and comprised 40 million common equity shares of the company issued in connection with the financing of the acquisition of American Life Insurance Co. (ALICO) and Delaware American Life Insurance Co.

Presently, these debentures are issued at an interest rate of 4.368% and are dated to mature on Sep 15, 2023. The company expects to distribute the proceeds from the debenture sale to the common equity holders against the prior stock purchase contracts.

Meanwhile, MetLife has appointed Morgan Stanley (NYSE: MS-Free Report), Citigroup Inc. (NYSE: C-Free Report), Credit Suisse AG (NYSE: CS-Free Report), HSBC Holdings Plc (NYSE: HBC-Free Report), and another foreign bank as the joint book-running managers for the sale.

Ratings Action

Further, the above-mentioned debentures are rated "A3" and "A-" from Moody's Investor Service and Fitch Ratings, respectively. However, Moody's casted a negative outlook on this long-term debt, while Fitch affirmed its stable stance.

Both ratings agencies remain confident of MetLife's capital flexibility, earnings growth potential on the heels of diversified business basket, large scale of operations and brand appreciation. However, Moody's is wary of the pace of growth, which is likely to pose a sluggish trend given the low interest rate environment across developed and emerging economies.

Exposure to variable annuities and spread business further add to the woes. Nonetheless, since last year, MetLife has been strategically shifting toward potential opportunities in the emerging markets and employee benefit products, while driving away from capital-intensive and spread-dependent products.

MetLife's financial leverage stood at 28% at the end of Jun 2013, which the ratings agencies believe should remain within 25%. Moreover, NAIC risk-based capital ratio that was 420% at the end of Jun 2013 should likely be around 450%.

While Fitch expects MetLife's interest coverage of about 8x for 2013, Moody's expect the company to maintain an over 8% return on capital, without depending on variable investment income, for a possible upgrade. Overall, MetLife has the potential to outperform the peer group in future.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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