Cleary Gottlieb represented the initial purchasers, Credit Suisse, BofA Securities, Citigroup, J.P. Morgan, Wells Fargo Securities, MUFG, and US Bancorp, in an offering of $1.5 billion of pre-capitalized trust securities redeemable May 15, 2030 (the P-Caps), issued by Five Corners Funding Trust II on May 22, 2020.
The trust invested the proceeds of the sale of the P-Caps in a portfolio of U.S. Treasury strips and entered into a facility agreement with Prudential Financial Inc. (PFI) under which PFI may issue up to $1.5 billion of its unsecured 2.85% senior notes due May 15, 2030 from time to time to the trust in exchange for an equal amount of treasuries. The structure was designed to give PFI a source of liquid assets and allow PFI to maintain competitive capital levels after a stress event has occurred, while providing P-Caps investors a risk profile equivalent to a direct investment in PFI senior debt. The P-Caps were offered under Rule 144A under the Securities Act and Section 3(c)(7) of the Investment Company Act and are currently rated the same as PFI senior debt by S&P and Moody’s.
Credit Suisse also acted as sole structuring advisor.
PFI is a financial services leader with approximately $1.481 trillion of assets under management as of March 31, 2020, 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.