Prudential’s $1.3 Billion Offering

August 21, 2020

Cleary Gottlieb represented the underwriters in SEC-registered offerings by Prudential Financial Inc. (Prudential) of $800 million 3.7% fixed-to-fixed reset rate junior subordinated notes due 2050 and $500 million 4.125% junior subordinated notes due 2060.

The underwriters for the offering of 2050 notes were led by Wells Fargo Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, and Mizuho Securities USA LLC. The underwriters for the offering of 2060 notes were led by Wells Fargo Securities LLC, BofA Securities Inc., Morgan Stanley & Co. LLC, and UBS Securities LLC. Both offerings priced on August 18, 2020, and closed on August 21, 2020.

The securities were structured as hybrid securities to receive equity credit from the rating agencies and be consistent with current Tier 2 capital guidelines applicable under the Federal Reserve rules to bank holding companies.

As a result, the securities 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 $1.605 trillion of assets under management as of June 30, 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.