Prudential Financial’s $1 Billion Offering

Cleary Gottlieb represented the underwriters in an SEC-registered offering by Prudential Financial Inc. (Prudential) of $1 billion 5.125% fixed-to-fixed reset rate junior subordinated notes due 2052.

The underwriters for the offering were led by BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC. The offering priced on February 23, 2022, and closed on February 28, 2022.

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 the Federal Reserve rules to bank 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 $1.74 trillion of assets under management as of December 31, 2021, 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.