Japan-Based Aeon's Subordinated Bonds Assessed As Having Intermediate Equity Content

TOKYO (S&P Global Ratings) Nov. 5, 2020--S&P Global Ratings today said it will classify Japan-based retailer Aeon Co. Ltd.'s (BBB/Negative/--) seventh series of subordinated bonds as having intermediate equity content. We will classify the proposed subordinated bonds as having intermediate equity content until 2030. We will regard 50% of the total issuance amount as equity and the remaining 50% as debt. The issuance amount is undecided as of this moment. The company plans to use the proceeds mainly to repay existing senior debt. The characteristics of the subordinated bonds--the issuer's option to defer interest payments, a sufficiently long residual time, and subordination in liquidation or bankruptcy proceedings--meet our standards for deeming them to have intermediate equity content. The bonds are

...November 5, 2020 TOKYO (S&P Global Ratings) Nov. 5, 2020--S&P Global Ratings today said it will classify Japan-based retailer Aeon Co. Ltd.'s (###/Negative/--) seventh series of subordinated bonds as having intermediate equity content. We will classify the proposed subordinated bonds as having intermediate equity content until 2030. We will regard 50% of the total issuance amount as equity and the remaining 50% as debt. The issuance amount is undecided as of this moment. The company plans to use the proceeds mainly to repay existing senior debt. The characteristics of the subordinated bonds--the issuer's option to defer interest payments, a sufficiently long residual time, and subordination in liquidation or bankruptcy proceedings--meet our standards for deeming them to have intermediate equity content. The bonds are due in 30 years. However, interest to be paid on the bonds increases 100 basis points (bps) in year 10 (2030). Because we consider the 100-bps increase a material step-up under...

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