Prudential Financial, Inc. to Redeem 5.375% Fixed-to-Floating Rate Junior Subordinated Notes due 2045

Rhea-AI Summary

Prudential Financial (NYSE: PRU) has announced plans to redeem $1 billion of its 5.375% Fixed-to-Floating Rate Junior Subordinated Notes due 2045. The redemption is scheduled for May 15, 2025, with noteholders receiving 100% of the principal amount plus accrued and unpaid interest.

The Bank of New York Mellon, serving as trustee, will distribute redemption notices to current noteholders. The company, a global financial services leader with $1.5 trillion in assets under management as of December 31, 2024, maintains operations across the United States, Asia, Europe, and Latin America.

Positive

• Early redemption of $1B debt indicates strong cash position
• Substantial AUM of $1.5T demonstrates significant market presence
• Global operational footprint across multiple regions

Negative

• Loss of 5.375% financing instrument may require higher-cost replacement funding if needed

Insights

Financial Analyst

Prudential's decision to redeem $1 billion of its junior subordinated notes represents a notable debt management move that merits attention. These particular notes, with their 5.375% fixed-to-floating rate structure, would have remained on Prudential's books until 2045, but management has elected to call them at par value.

This redemption has several financial implications. First, it eliminates a potentially volatile liability from Prudential's balance sheet. Fixed-to-floating rate structures typically switch to variable rates after an initial period, which could have exposed the company to rising interest expenses in uncertain future rate environments. By redeeming these notes now, PRU locks in the cost of this debt rather than facing potentially higher floating rates later.

The timing suggests management may be optimizing its capital structure in response to current market conditions. With $1.5 trillion in assets under management, this transaction represents a small fraction of Prudential's overall financial position but still demonstrates proactive liability management. The company is exercising a call option that was built into these securities, likely because they've determined more favorable financing alternatives exist or they have sufficient capital strength to reduce outstanding debt.

While the announcement doesn't specify replacement financing (if any), this move provides Prudential additional flexibility in its capital structure. For a financial institution of Prudential's size, maintaining optimal debt levels and debt composition is crucial for balancing shareholder returns with regulatory requirements and financial stability.

NEWARK, N.J.--(BUSINESS WIRE)-- Prudential Financial, Inc. (NYSE: PRU) announced today that it will redeem all of the $1,000,000,000 outstanding aggregate principal amount of its 5.375% Fixed-to-Floating Rate Junior Subordinated Notes due 2045 (CUSIP/ISIN No. 744320AV4 / US744320AV41) (the “Notes”). The Notes will be redeemed on May 15, 2025 at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date.

A notice of redemption is being sent to all currently registered holders of the Notes by the trustee, The Bank of New York Mellon. For more information, holders of the Notes may call The Bank of New York Mellon at 1-800-254-2826.

This release does not constitute a notice of redemption of the Notes.

FORWARD-LOOKING STATEMENTS

Certain of the statements included in this release constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. Prudential Financial, Inc.’s actual results may differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in the “Risk Factors” and “Forward-Looking Statements” sections included in Prudential Financial, Inc.’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Prudential Financial, Inc. does not undertake to update any particular forward-looking statement included in this release.

ABOUT PRUDENTIAL

Prudential Financial, Inc. (NYSE: PRU), a global financial services leader and premier active global investment manager with approximately $1.5 trillion in assets under management as of December 31, 2024, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees help make lives better and create financial opportunity for more people by expanding access to investing, insurance, and retirement security. Prudential’s iconic Rock symbol has stood for strength, stability, expertise, and innovation for nearly 150 years. For more information, please visit news.prudential.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250415615021/en/

MEDIA CONTACT: YeaJin Kim, yeajin.kim@prudential.com

Source: Prudential Financial, Inc.

FAQ

What is the redemption amount for PRU's 5.375% Notes due 2045?

Prudential will redeem $1 billion in outstanding principal amount, paying 100% of the principal plus accrued and unpaid interest.

When will PRU redeem its Fixed-to-Floating Rate Junior Subordinated Notes?

The redemption is scheduled for May 15, 2025.

How much assets under management does Prudential (PRU) have as of December 2024?

Prudential Financial has approximately $1.5 trillion in assets under management as of December 31, 2024.

What is the interest rate on PRU's Junior Subordinated Notes being redeemed?

The Notes carry a 5.375% Fixed-to-Floating Rate.