Moody’s rates Principal Financial notes Baa1, Baa2

Moody's Investors Service said it assigned a Baa1 senior debt rating to about $400 million of senior notes and a Baa2 (hyb) hybrid debt rating to roughly $400 million of junior subordinated debentures to be issued by Principal Financial Group, Inc. (PFG; guaranteed senior unsecured debt at Baa1, stable) under an existing shelf registration with the Securities and Exchange Commission.

The senior notes and junior subordinated debentures, which mature in 10 and 40 years, respectively, are guaranteed by Principal Financial Services, Inc. (PFSI; Baa1, stable), PFG's intermediate holding company.

Both the senior notes and the junior subordinated debentures have a stable outlook.

Net proceeds will be used to redeem about $550 million of preferred securities and for general corporate purposes.

Moody's said the ratings of both issuances were based on a full, unconditional, and irrevocable guarantee from PFSI, the direct owner of Principal Life Insurance Co. (insurance financial strength rating at A1, stable), which is a major U.S. pension and life insurance provider, particularly in the specialized 401(k) pension sector, where it is a market leader.

Because of the structural subordination of PFG's obligations to those of PFSI, PFG's senior debt and subordinated debt ratings would each be a notch lower without the PFSI guarantee.

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