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Fitch: Pru Financial's Hybrid Debt at 'BBB-'

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Fitch Ratings has given a ‘BBB-’ rating to Prudential Financial Inc.’s (PFI) issuance of $1 billion of 5.875 percent fixed to floating rate junior subordinated notes that will be due in 2014.

The proceeds from the issuance are expected to be utilized to prefund maturing debt as well as to call elements of outstanding retail notes at par.

Fitch maintains that, according to its rating criteria, the hybrid debt issuance has not been assigned any equity credit and PFI’s Financial Leverage Ratio is not affected.

The company’s leverage ratio (a method used to calculate a company’s ability to meet its financial obligations) was at 35 percent in June of 2012 compared to 32 percent in 2011. The ratio did however increase as anticipated when PFI adopted a new accounting standard for deferred acquisition costs which in turn reduced shareholder’s equity and increased the leverage ratio by 2 percent and a first half increase in debt. Total leverage was flat at year-end 2011, standing at 42 percent.


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