Prudential Financial’s $500 Million Offering

February 27, 2023

Cleary Gottlieb represented the underwriters in an SEC-registered offering by Prudential Financial Inc. (Prudential) of $500 million 6.75% fixed-to-fixed reset rate junior subordinated notes due 2053.

The underwriters were led by J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., and Morgan Stanley & Co. LLC. The offering priced on February 22, 2023, and closed on February 27, 2023.

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 $1.38 trillion of assets under management as of December 31, 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.