May 8, 2009 / 4:04 PM / in 8 years

UPDATE 1-Sun Life to issue C$200 mln in preferred shares

* Issue priced at C$25 per share

* Proceeds for general purposes; qualify as Tier 1 capital (Adds details, background)

TORONTO, May 8 (Reuters) - Sun Life Financial Inc (SLF.TO) said on Friday it would issue up to C$200 million ($172 million) in preferred shares, tapping debt markets just a day after announcing weaker than expected quarterly earnings.

Canada’s third-largest insurer said the public offering of class A noncumulative five-year rate reset shares will be issued at C$25 per share and holders will be entitled to fixed quarterly dividends in the amount of C$0.375 per preferred share, to yield 6.0 per cent annually.

Sun Life said net proceeds of the offering will be used for general corporate purposes and are expected to qualify for Tier 1 capital.

The offering will be underwritten by a syndicate led by TD Securities and BMO Capital Markets on a bought deal basis, and is expected to close on May 20.

The offering comes a day after Sun Life posted a first-quarter loss of C$213 million, or 38 Canadian cents a share, compared with a profit of C$533 million, or 93 Canadian cents a share, a year ago. Analysts had expected a loss of 19 Canadian cents a share.

Sun Life is one of several Canadian financial operations to tap debt and equity markets for additional funds. All the country’s Big Six banks have launched preferred shares or note offerings this year to strengthen their balance sheets, and insurer Manulife Financial (MFC.TO) issued medium-term notes in April.

$1=$1.16 Canadian Reporting by Andrea Hopkins; editing by Rob Wilson

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