News Column

Fitch Rates Prudential Financial Inc.'s Senior Debt 'BBB+'

May 14, 2014



CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned a 'BBB+' rating to $1.2 billion of new senior unsecured notes issued by Prudential Financial, Inc. (PFI). Other PFI ratings are unaffected. The Rating Outlook for PFI's Ratings is currently Stable.

KEY RATING DRIVERS

The ratings are equivalent to the ratings assigned to PFI's existing senior unsecured notes, and reflect standard notching based on Fitch's rating criteria.

Proceeds from the debt issuance are anticipated to fund debt maturing in 2014. As a result, Fitch's view of financial leverage is not affected by this issuance.

PFI's balance sheet fundamentals remain consistent with rating expectations, and recent financial performance has exceeded rating expectations. The ratings assigned to PFI and its subsidiaries continue to reflect the company's very strong competitive position in the U.S. and Japanese life insurance markets.

Fitch views the statutory capital adequacy of PFI's insurance subsidiaries as very strong. At year-end 2013, PFI reported a combined risk-based capital (RBC) ratio for its U.S. insurance subsidiaries of 456%. PFI's two Japanese insurance subsidiaries, Prudential of Japan and Gibraltar, reported solvency margin ratios of 772% and 937%, respectively. PFI's financial leverage remains above rating expectations, and was approximately 34% at year-end 2013.

As a result of recent improvement in financial performance, which has benefited from improved financial market conditions and recent acquisitions, GAAP interest coverage has improved to 9.5x in 2013 compared to 6.1x in 2012.

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 lowering 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 a 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 commercial paper (CP) above 10% of total debt on a sustained basis; a total financing and commitments ratio (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%, 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.

--$700 million of 3.50% senior notes due 2024 'BBB+';

--$500 million of 4.60% senior notes due 2044 'BBB+.'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology, November 2013.

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=830191

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. 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.



Fitch Ratings

Primary Analyst

Douglas L. Meyer, CFA

Managing Director

+1-312-368-2061

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

or

Secondary Analyst

Bradley S. Ellis, CFA

Director

+1-312-368-2089

or

Committee Chairperson

James Auden

Managing Director

+1-312-368-3146

or

Media Relations

Brian Bertsch, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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