Moody's rates Prudential convertibles A3

Moody's Investors Service said it assigned an A3 senior unsecured debt rating to Prudential Financial, Inc.'s $2 billion offering of floating-rate convertible senior notes due 2036, which have a conversion price of $104.21 and are non-callable for 12 months.

The outlook is positive.

Moody's said it expects that the majority of the proceeds will be invested, and will remain invested while the notes are outstanding, in a closely matched - in terms of interest rate risk - portfolio of highly liquid, high-grade, fixed-income securities.

The agency said the rating for the notes reflects Prudential's sound capital position, its increasingly diversified earnings, aided by growing international insurance operations, and its strong brand name. Divestitures made in the recent past should help to stabilize Prudential's earnings over the long term, Moody's said, adding that Prudential's recent acquisitions have enhanced its market position and provided scale efficiencies in the annuities and retirement businesses.

However, these strengths are tempered by the challenges of meeting the increasingly heightened competition among financial services companies and there remains some uncertainty, albeit reduced, relating to retained costs and obligations associated with the former Prudential Securities operations, the agency said.

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