Prudential Financial Inc.
) recently issued $500 million 5.20% fixed-to-floating rate
junior subordinated notes have been conferred a debt rating of
"bbb" by A.M. Best Co.
The rating agency has kept unchanged other ratings which
include - financial strength, issuer credit and existing debt
ratings of Prudential Financial and its subsidiaries.
All the ratings carry a stable outlook. A stable outlook
reflects that Prudential is experiencing stable financial and
market trends, and that therefore a rating change in the near
term is unlikely.
Though the notes will mature in 2044, Prudential has the
option to pay back the notes on or after Mar 15, 2024. It can
also make payment on the notes at any time within 90 days after
the occurrence of a 'tax event,' 'a rating agency event' or a
'regulatory capital event.'
The funds gathered from the notes issue will be used primarily
for general corporate purposes which includes redemption of the
company's 9% junior subordinated notes due in 2068.
Prudential's operating results, debt servicing capability,
capital strength as well as reliance on both short and long-term
external debt were all taken into account by the rating agency
for the rating action.
The rating agency takes into account Prudential's repeated
issuance of debt in the last month. The company has in total
issued $1.2 billion of junior subordinated notes.
On the flip side, Prudential's high financial leverage ratio
of 35% continues to be a cause of concern for the rating agency.
It was also concerned with the company's Total Financing and
Commitments ratio of 1.4x, which was above its peer group average
due to high use of debt within the insurer's capital
Nevertheless, Prudential's robust statutory capitalization
gives the rating agency adequate confidence in the company. The
rating agency expects higher earnings and coverage ratios going
Prudential's stock retains a Zacks Rank #3 (Hold).
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