Phoenix Group Holdings Regulatory News (PHNX)

This announcement is not for release in the United States of America, Canada, Australia, South Africa and Japan or in any other jurisdiction in which offers or sales would be prohibited by applicable law.

30 June 2014

Phoenix Group announces a £300 million senior unsecured bond issue

Highlights

· Priced a £300 million 7 year Sterling-denominated senior unsecured bond at an annual coupon of 5.75%

· Strong demand from fixed income institutional investors following a three day investor roadshow

· Proceeds will be used to refinance a portion of the Group's existing Impala silo senior bank debt

· Supports Phoenix's plans to unify the two existing bank debt facilities into a single facility

· Phoenix continues to target an investment grade credit rating

Summary of transaction

Phoenix Group Holdings ("Phoenix" and, together with its subsidiaries, the "Group") announces that it has priced a £300 million 7 year Sterling denominated senior unsecured bond (the "Bond"). The Bond will be issued by PGH Capital Limited, a financing subsidiary of Phoenix Group Holdings, and guaranteed by Phoenix. The Bond will be issued on 7 July 2014 with a maturity date of 7 July 2021.

The successful Bond issue is a further milestone in the financial strengthening of Phoenix and an important step towards gaining wider access to the debt capital markets as it seeks to further simplify the Group's debt structure. The net proceeds from the issue will be used to refinance part of the Group's existing Impala silo senior bank debt1.

The transaction saw strong demand from fixed income institutional investors with an order book that was two times over-subscribed and enabling Phoenix to price the Bond at the bottom of its target range, with the annual coupon being 5.75%.

In addition to re-financing a proportion of the Group's existing Impala silo bank debt, the transaction is expected to provide greater financial flexibility for the Group in future, including:

· Reducing the Group's reliance on bank finance by accessing the wider debt capital markets, thereby reducing the refinancing requirement from Phoenix's existing bank debt structure;

· Extending the maturity profile of the Group's debt, with the term of the Bond being two years longer than the final maturity of the existing Impala bank facility in June 2019, thereby better matching the debt amortisation profile to Phoenix's forecast cash generation;

· Reducing interest costs for the Group, with an annual coupon of 5.75% on the Bond (with the re-offer yield equivalent to 7 year Sterling mid-swaps plus 321bps). This coupon compares favourably to the margin of the current Impala bank facility which is currently 475bps, with a step up in margin to 700bps above Libor from 1 January 2018;

· Further supporting Phoenix's sustainable dividend policy and generating additional financial flexibility for the Group to participate in future consolidation of the UK closed life fund market;

· Facilitating Phoenix's plans to unify the two existing bank debt facilities into a single facility, simplifying the corporate structure and facilitating a possible future internal merger of the Group's two largest UK life companies; and

· Offering Phoenix an additional source of funding as it implements its growth strategy of closed life fund consolidation, as well as enhancing Phoenix's credibility as a counterparty.

Furthermore, Phoenix continues to target an investment grade credit rating and expects to engage with rating agencies in due course.

Citigroup, HSBC, J.P. Morgan Cazenove and Lloyds Bank are acting as joint lead managers on the transaction2.

Clive Bannister, Group Chief Executive, commented:

"This successful debut Bond issue is another step in the strengthening of the Phoenix Group. The Bond issue, together with the other actions that Phoenix has taken over the past 18 months, will have allowed us to reduce our bank debt since the start of 2013 from £2.3 billion to £1.0 billion. This issue demonstrates Phoenix's ability to access the wider debt capital markets on attractive terms, extending the maturity profile of our debt and providing the Group with additional flexibility in executing its growth strategy. Furthermore, it provides a base from which we will continue to progress our aims of unifying our two bank debt silos and ultimately seeking an investment grade credit rating."

Enquiries

Equity Investors:

Sam Perowne, Head of Investor Relations, Phoenix Group

+44 (0) 20 3735 0021

Debt Investors:

Rashmin Shah, Group Treasurer, Phoenix Group

+44 (0) 20 3735 0059

Media:

Neil Bennett, Maitland

Peter Ogden, Maitland

+ 44 (0) 20 7379 5151

Notes

1) Total Impala silo bank debt was £1.2 billion as at 31 December 2013. As a result of the partial repayment of Impala silo bank debt following the completion of the Bond issue and the divestment of Ignis Asset Management Limited, together with amortisation payments made during the first half of 2014, the outstanding Impala bank debt will be £0.6 billion on a pro forma basis as at 30 June 2014. In addition there is £0.4 billion of outstanding Pearl silo bank debt and PIK notes and £0.1 billion of Impala PIK notes as at 30 June 2014.

2) The net proceeds of the Bond issue will be used to reduce the Impala silo bank debt, which includes debt owed to certain of the joint lead managers (HSBC and Lloyds Bank) who are lenders under the Impala facility.

3) Phoenix is the UK's largest specialist consolidator of closed life funds with over 5 million policyholders as at 31 December 2013.

Disclaimer

This announcement is for information purposes only and does not contain or constitute an offer of, or the solicitation of an offer to buy, securities to any person in the United States or in any other jurisdiction, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any securities referred to herein may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "Securities Act") or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No offer or sale of any securities referred to herein has been or will be registered under the Securities Act. There will be no public offer of any such securities in the United States.

This announcement does not constitute and shall not, in any circumstances, constitute a public offering nor an invitation to the public in connection with any offer within the meaning of the Directive 2010/73/EU of the Parliament and Council of November 4, 2003 as implemented by the Member States of the European Economic Area (the "Prospectus Directive"). The offer and sale of the Bond was made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area, from the requirement to produce a prospectus for offers of securities.

This communication is directed only at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments or (iii) are persons falling within Article 49 (2(a) to (d) ("high net worth companies, unincorporated associations etc") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.