A.M. Best has conferred a debt rating of 'a-' to the newly
issued debt by
Prudential Financial Inc.
Prudential had issued the debt in three parts. The first was
of $350 million worth of 5.1% 30-year notes, the second of $350
million worth of 2.3% five-year notes and the third of $350
million five-year notes carrying floating rate of interest.
The rating agency has kept other ratings untouched, which
includes 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
The funds from the notes issue will be used for general
corporate purpose along with refinancing the company debt, which
is scheduled to mature in 2014.
Though the debt issue will pull the company's debt ratio
northwards and also strain its interest coverage ratio, the
capital position remains supportive of its current rating
The rating agency acknowledges Prudential's operating results,
debt servicing capability, capital strength and diversified
business profile. The company's investment portfolio is also
performing better. Investment related losses have narrowed down
and commercial mortgage backed securities have yielded net
unrealized gain as of Jun 30, 2013.
However, the existence of below investment grade securities in
the form of subprime residential mortgage-backed securities as
well as commercial real estate is a cause of concern. Also, the
company has a greater overall leverage compared to its peers.
Prudential's stock retains a Zacks Rank #2 (Buy).
Other stocks within our coverage
) all carry investment grade ratings from A.M. Best.
ASSURANT INC (AIZ): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
To read this article on Zacks.com click here.