Prudential Financial’s $1.5 Billion Contingent Capital Facility

Cleary Gottlieb represented the initial purchasers, Credit Suisse, BofA Securities, Citigroup, Deutsche Bank Securities, Mizuho, BNP Paribas, and U.S. Bancorp, in an offering of $800 million of pre-capitalized trust securities redeemable February 15, 2033 (the 2033 P-Caps) by Five Corners Funding Trust III (the 2033 Trust) and $700 million of pre-capitalized trust securities redeemable February 15, 2053 (the 2053 P-Caps) issued by Five Corners Funding Trust IV (the 2053 Trust) on March 8, 2023.

The 2033 Trust invested the proceeds of the sale of the 2033 P-Caps in a portfolio of U.S. Treasury strips and entered into a facility agreement with Prudential Financial Inc. (PFI) under which PFI may issue up to $800 million of its unsecured 5.791% senior notes due February 15, 2033 from time to time to the 2033 Trust in exchange for an equal amount of Treasuries. The 2053 Trust invested the proceeds of the sale of the 2053 P-Caps in a portfolio of U.S. Treasury strips and entered into a facility agreement with PFI under which PFI may issue up to $700 million of its unsecured 5.997% senior notes due February 15, 2053 from time to time to the 2033 Trust in exchange for an equal amount of Treasuries. The structure was designed to give PFI a source of liquid assets and allow PFI to maintain competitive capital levels after a stress event has occurred, while providing P-Caps investors a risk profile equivalent to a direct investment in PFI senior debt. The P-Caps were offered under Rule 144A under the Securities Act and Section 3(c)(7) of the Investment Company Act and are currently rated the same as PFI senior debt by S&P and Moody’s.

Credit Suisse also acted as sole structuring advisor.

PFI is a financial services leader with approximately $1.4 trillion of assets under management as of March 1, 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.