Fitch Rates Prudential Financial Inc.'s Hybrid Debt 'BBB-'

Mon Mar 11, 2013 5:04pm EDT

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(The following statement was released by the rating agency) NEW YORK, March 11 (Fitch) Fitch Ratings has assigned a 'BBB-' rating to Prudential Financial, Inc.'s (PFI) issuance of $650 million of 5.70% junior subordinated notes due in 2053. KEY RATING DRIVERS The rating is equivalent to the ratings assigned to PFI's existing junior subordinated notes, and reflects standard notching based on Fitch's rating criteria. Fitch expects proceeds from the debt issuance to be used primarily to refinance outstanding retail hybrids, so this is not viewed as an increase in financial leverage. PFI's financial leverage ratio (FLR) was 35% at year-end 2012. Based on Fitch's rating criteria, this hybrid debt issuance has not been assigned any equity credit. Fitch last reviewed and affirmed PFI's ratings on Dec. 5, 2012. The affirmation of PFI's ratings reflects Fitch's view that the company's recent financial performance and balance sheet fundamentals remain consistent with rating expectations. The Outlook for all ratings is Stable. RATING SENSITIVITIES Key rating triggers that could result in an upgrade of PFI's operating and holding company ratings are: continued reduced reliance on short-term funding; progress reducing the financial leverage ratio to the mid-20% range and total leverage below 40%; GAAP interest coverage in the 8x-10x range (based on pre-tax adjusted operating earnings); stated NAIC RBC ratio remaining near current levels; and Japan solvency margin ratio above 700%. Key rating triggers that could result in a downgrade of PFI's holding company ratings (i.e. wider notching from the operating company) include: an FLR above 35%; outstanding CP above 10% of total debt on a sustained basis; a TFC above 1.5x; and/or a GAAP interest coverage ratio below 5x. Triggers that could result in a downgrade of both operating and holding company ratings include: a stated NAIC RBC ratio below 400%, and Japan solvency margin ratio below 600%, as well as a more significant breach of the above noted holding company triggers. Fitch has assigned the following rating: Prudential Financial, Inc. --5.70% junior subordinated notes due 2053 'BBB-' Contact: Primary Analyst Cynthia J. Crosson Director +1-212-908-0863 Fitch Ratings, Inc. One State Street Plaza New York, New York 10004 Secondary Analyst Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson James Auden Managing Director +1-312-368-3146 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'Insurance Rating Methodology, Jan. 11, 2013. Applicable Criteria and Related Research Insurance Rating Methodology — Amended here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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