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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 14, 2017 02:58 PM (EDT)
A.M. Best has assigned a Long-Term Issue Credit Rating(Long-Term IR) of “bbb” to the $750 million 4.50% fixed-to-floating rate junior subordinated notes due 2047 that were recently issued by Prudential Financial Inc. (PFI) (Newark, NJ) [NYSE:PRU]. The outlook assigned to the Credit Rating (rating) is stable. The existing ratings of PFI and its subsidiaries are unchanged.
The assigned Long-Term IR reflects the note’s 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. PFI intends to use the majority of the proceeds from this bond offering to refinance a $600 million 8.875 % junior subordinated note issue that is callable in 2018. The remaining funds will be used for general corporate purposes.
The rating reflects standard notching from PFI’s Long-Term Issuer Credit Rating (Long-Term ICR) of “a-”. PFI’s Long-Term ICR reflects strong operating performance in its core business segments, meaningful diversification of earnings and strong liquidity. PFI has repeatedly demonstrated its ability to access capital markets, particularly over the past several years. However, A.M. Best notes that PFI, although consistent with its scale and business mix, continues to utilize significant amounts of total leverage. Additionally, this most recent issuance will temporarily elevate its leverage ratios, although leverage will decline later when the higher coupon security is called. Although somewhat higher in the short term, financial leverage remains within the guidelines for the company’s current rating level. Additionally, interest coverage remains within A.M. Best’s guidelines for the current rating. A.M. Best also notes that PFI currently maintains above-average levels of cash resources if needed.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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