NU Online News Service, Nov. 20, 12:37 p.m. – MetLife Inc., New York, is borrowing $1.25 billion from investors by issuing $1.25 billion in senior notes.

The MetLife offering includes $500 million in 5-year senior notes due Dec. 1, 2006. Those notes pay 5.25% interest.

The offering also includes $750 million in 10-year senior notes due Dec. 1, 2011, which pay 6.125% interest.

Units of Bank of America Corp., Charlotte, N.C., and Lehman Brothers Holdings Inc., New York, are managing the offering.

One rating service, Fitch, Chicago, gave the notes a rating of AA- and set the “rating outlook” at “stable.”

Proceeds from the debt sale will replace commercial paper that MetLife paid down in the third quarter, Fitch says in a commentary on the offering.

MetLife “has used commercial paper to finance working capital needs of MET’s operating subsidiaries and to fund repurchase of corporate stock,” Fitch says.

Another rating agency, Moody’s Investors Service, New York, assigned the MetLife notes a rating of A1.

Moody’s also changed the outlook for MetLife as a whole to negative, from stable, although it maintained a stable outlook life for the Metropolitan Life Insurance Company subsidiary.

Moody’s issued a commentary praising the operations the parent company and its life subsidiary.

But MetLife has shifted toward products with low profit margins, and it is vulnerable to volatility in the stock market and commercial real estate market, Moody’s says.

Moody’s analysts worry that “there is an appetite for assuming higher levels of risk in the MetLife organization that could raise the risk for creditors of the holding company,” Moody’s says

MetLife may reduce capital levels at its operating companies and use capital at the holding company level to make foreign acquisitions and repurchase shares, Moody’s says.