IAG trading lower after paying off $450m debt early

The news: IAG shares are down after the insurer announced it would pay off $450 million in debt on 16 June, 20 years before its due date.

The numbers: IAG shares were down 1.21% to $8.55 at 11:03am AEST.

The context: The insurer is redeeming $450 million of subordinated medium term notes that were issued under IAG’s wholesale debt issuance programme and were due 15 June 2045. Interest will continue to accrue on the original principal amount until the early redemption date.

Last week, IAG shares were buoyed after IAG announced plans to acquire the entire RAC insurance business for $400 million and spend $950 million for a distribution and licensing agreement under a deal with The Royal Automobile Club of Western Australia.