Moody’s rates Five Corners P-Caps A3

Moody's Investors Service said it assigned an A3 senior unsecured debt rating to the pre-capitalized trust securities (P-Caps) issued by Five Corners Funding Trust III and Five Corners Funding Trust IV, two Delaware statutory trusts that will serve as a source of liquidity for Prudential Financial, Inc. Moody's assigned a stable outlook to the trusts.

According to the terms of the facility, Five Corners Funding Trust III and Five Corners Funding Trust IV will issue P-Caps maturing in 2033 and 2053, respectively, and use the proceeds to buy high-quality collateral held in the trusts for the benefit of investors. Prudential Financial may issue its senior notes to the trusts, in exchange for some or all of the collateral. However, absent the issuance of the senior notes, the P-Caps will be treated by Moody's as an off-balance sheet for analytic purposes and not included in either adjusted financial leverage or total leverage, the agency said.

“Moody's said that the transaction is a credit positive because it provides Prudential Financial with an alternative source of liquidity and diversifies its funding sources. The P-Caps will provide PFI with a committed source of financing that can be used under financially difficult circumstances and under normal conditions, i.e., the company has the right to issue senior notes to the trust and receive treasury securities at any time, including if its credit condition has deteriorated,” the agency said in a press release.

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