Prudential’s $1 Billion Offering

Cleary Gottlieb represented the underwriters in an SEC-registered offering by Prudential Financial Inc. (Prudential) of $1 billion 6.5% fixed-to-fixed reset rate junior subordinated notes due 2054.

The underwriters were led by Wells Fargo Securities LLC, Barclays Capital Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC. The offering priced on March 6, 2024, and closed on March 11, 2024.

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 $1.45 trillion of assets under management as of December 31, 2023, 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.