Prudential Financial to Sell Baby Bonds

Prudential Financial (PRU) will sell a new issue of $25 baby bonds.

The Junior Subordinated Notes will have a maturity date in 2060 and a optional redemption date of 9/1/2025.

The company currently has 3 other baby bonds outstanding, 2 of which are currently optionally redeemable. CORRECTED–the company intends to call the 2 redeemable issues (thanks Jag).

The issue will be investment grade.

The 3 outstanding issues can be seen here.

The preliminary prospectus can be read here.

mcg was right on top of this one at 7:45 am this morning with EarlyBird positing yield talk in the 4.50% area.

21 thoughts on “Prudential Financial to Sell Baby Bonds”

    1. What is the basis for “looking to price” a certain amount- a source, or guess?
      Just curious how anyone would really know.

  1. Tim – Page 10 of the preliminary prospectus states that proceeds will be used to call 5.75% and 5.7% BBs.

      1. Doesn’t the long term lack of performance from PRU common stock bother you? 3yr, it’s down 33%. 5yr, it’s down 15%. Morningstar says it has no moat – at least according to what Schwab is reporting. No wonder it’s yielding 6%+… You’re assuming this risk and the downward ski slope.

        1. A41 – As a retired income investor I pay more attention to an attractive and consistent dividend than share price. PRU has raised their payout for the last 7+ years and during that time-frame it has more than doubled. Couple that with a 6% level and it has my interest for a small stake.

          I know what you mean about long term shareholders experiencing the pain of share value depreciation though – I have owned EPD for years but again its the dividend that keeps me there and I look a declining share price as simply an opportunity to buy more – IF the business fundamentals are still sound enough to back up the dividend reliability over time.

          1. Bill,
            As you know, EPD and PRU are definitely not apples-apples in the comparison department but your sentiment is spot on! I am a long term unitholder in EPD and I agree, the ride has been painful from a unit price perspective but quite nice from the income perspective. Perhaps I should have presented my response this way: I know why something like a EPD is down over multiple years, but why is PRU down over such a long stretch of time?

            Nothing wrong with a good income play or gambling with a little speculative money. That’s what makes a market.

            1. A4I – Afraid I don’t know whey the PRU share price has languished as I never followed it until now. Morningstar seems to think its a bit undervalued but who knows…..

              Dividend growth stands at 11 years so lets see if they can keep it going.

              1. Time-wise, almost seems like their slide started near the taper tantrum of 2013 – showing sensitivity to interest rates. That is a big threat to them now for sure – “lower for longer”. Interest rates bottoming, pullbacks in spending by consumers, and so on… Coincidentally, 2013 is when they bought the individual life insurance business from Hartford for ~615mm, so the timing of that and the slide in the stock is a little odd. There was also huge M&A activity from 2010-2012 as well. Lots of moving parts here.

      2. Craig/BillW

        Brought the common also in the high $68 per share. Sold covered call options for 9-18 at $75 per share. Between covered calls and high dividend, the common could generate 10%+ per year.

    1. According to Moody’s risk assessment, PRU is rated at 7 (higher risk), while the much maligned B. Riley is now rated 5 (medium risk).

      1. Are you talking about the common? Because pru ofds are investment grade rily are not rated. Pru was founded in 1875….and many of their bonds are A rated by moodys! Not the same in any way. BUT I will say Rileys issues have held up pretty well

        BTW I believe pru did price at 425

      2. James, B Riley might be maligned (and quite honestly not fully understood by me, being all its in) but I got a decent amount of their baby bonds that have finally started to wake up. I will not take the money and run, and will just keep holding.

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