Moody's rates Principal Financial notes Baa1

Moody's Investors Service said it assigned a Baa1 senior debt rating to about $500 million of senior notes to be issued by Principal Financial Group, Inc. (PGF) under its existing shelf registration.

The notes, which will have a 10-year maturity, will be guaranteed by Principal Financial Services, Inc., PFG's intermediate holding company.

The proceeds from the issuance, together with internal funds, will be used to acquire the Institutional Retirement and Trust business unit from Wells Fargo & Co. for $1.2 billion in cash, as announced by PFG in April, Moody's said.

The transaction is expected to close in the second half of 2019, the agency said.

The rating agency said that the new issuance will incrementally increase total debt, although within its expectations for leverage and regulatory capital adequacy, Moody's said.

Integration risks and costs notwithstanding, the agency said the transaction was overall credit positive for Principal Financial, improving the company's scale and rank in the defined contribution pension market, while adding potential incremental product revenues and earnings down the road.

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