AM Best Assigns Issue Credit Rating to Prudential Financial, Inc.’s New Junior Subordinated Notes

AM Best has assigned a Long-Term Issue Credit Rating of “bbb” (Good) to the $1 billion, 6.5% fixed to fixed reset rate junior subordinated notes, due March 15, 2054, of Prudential Financial, Inc. (Prudential) (Newark, NJ) [NYSE: PRU]. The outlook assigned to this Credit Rating (rating) is stable. All other ratings of Prudential and its subsidiaries remain unchanged.

The proceeds from this debt issuance are expected to be used for general corporate purposes, which may include repurchasing all of Prudential’s $1.0 billion, 5.375% fixed to floating rate junior subordinated notes due in 2045 and callable in 2025. The impact on Prudential’s debt leverage is expected to elevate slightly higher over the medium term as a higher leverage ratio will be realized prior to the note redemption before decreasing to the mid-to-high 20% range, and the interest coverage with this debt issue is expected to remain favorable. Prudential’s liquidity position is strong, with the parent company holding highly liquid assets of $4.1 billion at year-end 2023. The company’s full-year 2023 pre-tax adjusted operating income was $5.5 billion; however, on a net basis, the company reported gains of $2.5 billion. In its most recent disclosure, a primary driver of full-year 2023 results, is derived by both its U.S. business and international business segments, as well as Prudential’s global asset management business (PGIM,), which added approximately $700 million of fee based pre-tax earnings.

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