|[November 15, 2012]
A.M. Best Assigns Debt Rating to Prudential Financial, Inc.'s New Junior Subordinated Notes
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has assigned a debt rating of "bbb" to the recently
issued $1.5 billion 5.625% fixed-to-floating rate junior subordinated
notes maturing June 15, 2043 of Prudential Financial, Inc. (PFI)
(Newark, NJ) [NYSE: PRU]. The assigned outlook is stable. The financial
strength, issuer credit and existing debt ratings of PFI and its
domestic life/health insurance companies are unchanged.
The assigned rating reflects the notes' deeply subordinated status
within PFI's capital structure. Specifically, these securities will rank
junior to PFI's existing and future senior indebtedness and pari passu
with PFI's existing junior subordinated notes.
A.M. Best notes that the newly issued junior subordinated notes mirror
the key terms of the company's most recent issuance. (See A.M. Best's
press release dated August 8, 2012 for further information.) Similarly,
these notes differ from the other existing junior subordinated debt in
that PFI may redeem the new notes on or after June 15, 2023 or at any
time within 90 days after the occurrence of a "tax event," a rating
agency event" or a regulatory capital event." The net proceeds of the
hybrid offering are expected to be used for general corporate purposes
including the redemption of PFI's outstanding retail medium-term notes.
The rating recognizes PFI's very strong liquidity at the holding company
in addition to the strong operating performance of its various business
segments. PFI has repeatedly demonstrated its access to the capital
markets, particularly over the past two years. However, A.M. Best notes
that PFI, although consistent with its scale and business mix, continues
to utilize significant amounts of total leverage. A.M. Best notes that
this most recent issuance somewhat reduces PFI's overall financial
flexibility. However, incorporating partial equity credit for the new
notes, financial leverage remains within the guidelines for the
company's current rating level. Based on A.M. Best's methodology,
interest coverage is below guidelines for the current rating but is more
than mitigated by the strong reported adjusted operating income and
excess cash at the holding company.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a
comprehensive explanation of A.M. Best's rating process and contains the
different rating criteria employed in the rating process. Best's Credit
Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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