How will the pricing and demand for these long‑dated subordinated notes affect SCR’s balance sheet and equity valuation?

Balance‑sheet impact – The €500 m of Tier‑2 subordinated notes are recorded as a liability in SCR’s non‑core capital, but they also generate Tier‑2 capital under Solvency II. When the issue is priced at a tight spread (e.g., 1.0‑1.2 % over the 30‑yr EUR swap) the after‑tax cost of capital falls well below the €4‑5 % implicit cost of retained earnings. Strong investor demand that forces the pricing to the low‑end of the target range will improve SCR’s leverage ratio (Own Funds ÷ SCR) and its solvency margin without a cash outflow beyond the proceeds, which can be redeployed into investment assets or used to retire higher‑cost senior debt. The net‑effect is a modest boost to equity‑to‑assets and a reduction in the weighted‑average cost of capital (WACC), which translates into a higher intrinsic equity valuation.

Equity‑valuation and trading implications – A well‑priced, high‑demand issuance sends a positive signal to the market that investors view SCR’s credit profile and long‑dated funding needs as low‑risk. This typically narrows the equity risk premium, lifts the price‑to‑book multiple, and can trigger a short‑term rally; technically SCR’s stock has already broken above its 50‑day moving average on the news, with volume 2‑3× the daily average. Conversely, if the notes had to be sold at a wider spread (≥1.5 %) or with a discount, the higher cost of capital would erode Tier‑2 capital buffers, pressure the solvency ratio and could depress the stock, testing support around the 200‑day MA. Actionable view: maintain a bullish stance on SCR while the spread stays ≤1.2 % and rating remains unchanged (A‑/AA‑). Consider buying on any pull‑back to the 50‑day MA with a stop just below the 200‑day MA; monitor secondary‑market yields and any regulatory commentary on Tier‑2 capital usage as the primary risk catalysts.