

14. Subordinated Debt

The following obligations are included in Subordinated debt as at December 31, and qualify as capital for Canadian regulatory purposes:



	Interest rate		Earliest par call or redemption date⁽¹⁾		Maturity	2019			2018
Sun Life Assurance:
Issued May 15, 1998⁽²⁾	6.30	%	n/a		2028		$	150		$	150
Sun Life Financial Inc.:
Issued May 29, 2007⁽³⁾	5.40	%	May 29, 2037	⁽⁴⁾	2042		398			398
Issued May 13, 2014⁽⁵⁾	2.77	%	May 13, 2019		2024		—			250
Issued September 25, 2015⁽⁶⁾	2.60	%	September 25, 2020		2025		500			499
Issued February 19, 2016⁽⁷⁾	3.10	%	February 19, 2021		2026		349			349
Issued September 19, 2016⁽⁸⁾	3.05	%	September 19, 2023	⁽⁴⁾	2028		996			995
Issued November 23, 2017⁽⁹⁾	2.75	%	November 23, 2022		2027		399			398
Issued August 7, 2019⁽¹⁰⁾	2.38	%	August 13, 2024		2029		746			—
Total subordinated debt							$	3,538		$	3,039
Fair value							$	3,727		$	3,129

⁽¹⁾The debentures issued by SLF Inc. in 2007 are redeemable at any time and the debentures issued by SLF Inc. in 2014, 2015, 2016, and 2017 are redeemable on or after the date specified. From the date noted, the redemption price is par and redemption may only occur on a scheduled interest payment date. Redemption of all subordinated debentures is subject to regulatory approval.

⁽²⁾6.30% Debentures, Series 2, due 2028, issued by The Mutual Life Assurance Company of Canada, which subsequently changed its name to Clarica Life Insurance Company (“Clarica”) and was amalgamated with Sun Life Assurance. These debentures are redeemable at any time. Prior to May 15, 2028, the redemption price is the greater of par and a price based on the yield of a corresponding Government of Canada bond plus 0.16%.

⁽³⁾Series 2007-1 Subordinated Unsecured 5.40% Fixed/Floating Debentures due 2042. From May 29, 2037, interest is payable at 1.00% over Canadian dollar offered rate for three-month bankers’ acceptances (“CDOR”).

⁽⁴⁾For redemption of the 2007 debentures prior to the date noted, and for redemptions of the September 19, 2016 debentures between September 19, 2021 and September 19, 2023, the redemption price is the greater of par and a price based on the yield of a corresponding Government of Canada bond plus 0.25% for the 2007 debentures and 0.52% for the September 19, 2016 debentures.

⁽⁵⁾Series 2014-1 Subordinated Unsecured 2.77% Fixed/Floating Debentures due 2024. On May 13, 2019, SLF Inc. redeemed all of the outstanding $250 principal amount of these debentures in accordance with the redemption terms attached to such debentures.

⁽⁶⁾Series 2015-1 Subordinated Unsecured 2.60% Fixed/Floating Debentures due 2025. From September 25, 2020, interest is payable at 1.43% over CDOR.

⁽⁷⁾Series 2016-1 Subordinated Unsecured 3.10% Fixed/Floating Debentures due 2026. From February 19, 2021, interest is payable at 2.20% over CDOR.

⁽⁸⁾Series 2016-2 Subordinated Unsecured 3.05% Fixed/Floating Debentures due 2028. From September 19, 2023, interest is payable at 1.85% over CDOR.

⁽⁹⁾Series 2017-1 Subordinated Unsecured 2.75% Fixed/Floating Debentures due 2027. From November 23, 2022, interest is payable at 0.74% over CDOR.

⁽¹⁰⁾Series 2019-1 Subordinated Unsecured 2.38% Fixed/Floating Debentures due 2029. From August 13, 2024, interest is payable at 0.85% over CDOR.

Fair value is determined based on quoted market prices for identical or similar instruments. When quoted market prices are not available, fair value is determined from observable market data by dealers that are typically the market makers. The fair value is categorized in Level 2 of the fair value hierarchy.

Interest expense on subordinated debt was $105 for 2019 and 2018.