OREANDA-NEWS. Fitch Ratings expects to assign a 'BBB-' rating to Voya's proposed \\$500 million of Pre-Capitalized Trust Securities (P-Caps) issued by Peachtree Corners Funding Trust, a newly created Delaware trust that will serve as a source of capital and liquidity for Voya Financial, Inc. (Voya). The Rating Outlook for Voya is Positive.

KEY RATING DRIVERS

Voya has created a new Delaware trust, Peachtree Corners Funding Trust, which will issue \\$500 million of P-Caps. Each P-Cap will represent an undivided beneficial interest in the trust assets. The proceeds from the issuance will be invested in a portfolio of principal and interest strips of U.S. Treasuries. The trust will sell a put option to Voya that gives Voya the right to deliver newly issued senior debt maturing on Feb. 15, 2025 to the trust in exchange for the eligible assets.

If Voya exercises the put option, the newly issued senior debt would rank pari passu in right of payment and upon liquidation to Voya's current and future senior debt obligations. As such, the ratings on the P-Caps are equivalent to the ratings assigned to Voya's existing senior unsecured notes, which are currently rated 'BBB-'.

Fitch believes the newly issued P-Cap securities provide Voya with an additional source of capital and liquidity that could be used in a stress scenario. The issuance of the P-Cap securities will not impact financial leverage unless Voya exercises the put option to draw on the assets of the trust in exchange for issuing senior debt.

On March 6, 2014, Fitch revised its Outlook on Voya to Positive from Stable. The revision in the Outlook reflects the significant improvement in Voya's balance sheet strength as well as improved debt servicing capacity. Holding company financial leverage has declined to 21% at year-end 2014 from 56% at year-end 2010. Fitch believes the quality of the company's common equity is better than peer averages, with minimal exposure to goodwill and other intangibles.

RATING SENSITIVITIES

Key rating triggers that could result in an upgrade include:
--Continued growth in operating profitability on both a GAAP and statutory basis;
--Sustained maintenance of GAAP adjusted operating earnings-based interest coverage of more than 8x and statutory interest coverage of more than 4x;
--Reported RBC above 450%, and financial leverage below 25%;
--Private sale of closed-block book at good value with boost to capitalization and reduction in volatility and risk.

Triggers that could result in a downgrade include:
--A decline in reported RBC below 375%;
--Financial leverage exceeding 30%;
--Significant adverse operating results;
--Further material reserve charges required in its insurance/variable annuity books or a significant weakening of distribution channel or scale advantages.

Fitch expects to assign the following rating:

Peachtree Corners Funding Trust:
--\\$500 million of 3.976% pre-capitalized trust securities due 2025 'BBB-'.