Prudential Financial’s $1.5 Billion Offering

August 9, 2022

Cleary Gottlieb represented the underwriters in an SEC-registered offerings by Prudential Financial Inc. (Prudential) of $1.2 billion 6% fixed-to-fixed reset rate junior subordinated notes due 2052 and $300 million 5.95% junior subordinated notes due 2060.

The underwriters for the offering of 2052 notes were led by Wells Fargo Securities LLC, Barclays Capital Inc., BofA Securities Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., and Mizuho Securities USA LLC. The underwriters for the offering of 2052 notes were led by Wells Fargo Securities LLC, BofA Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, and UBS Securities LLC. The offering of 2052 notes priced on August 8, 2022, the offering of 2060 notes priced on August 9, 2022, and both offerings are scheduled to close on August 17, 2022.

The notes were structured as “hybrid” securities to receive equity credit from the rating agencies and be consistent with current Tier 2 capital guidelines applicable under insurance regulations to insurance holding companies.

As a result, the notes include features of traditional debt (such as a fixed maturity date and regular interest payments) and traditional equity (such as the right to defer current payments without causing an event of default), as well as a redemption right at par in the event Prudential becomes subject to Tier 2 capital requirements and the rules change in a way that disqualifies the securities as Tier 2 capital within 90 days of such a rule change. Prudential is also permitted to redeem the securities after the occurrence of a “tax event,” a “rating agency event,” or a “regulatory capital event.”

Prudential is a financial services leader with approximately $1.41 trillion of assets under management as of June 30, 2022, and has operations primarily in the United States, Asia, Europe, and Latin America. Its businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, and investment management.