OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned debt ratings of "a-" to Prudential Financial, Inc.'s (PFI) (Newark, NJ) [NYSE: PRU] newly issued senior unsecured notes. The securities were issued in two tranches: $250 million of 5.5-year 6.2% notes and $750 million of 10-year 7.375% notes. Concurrently, A.M. Best has assigned indicative ratings of "a-" to senior debt, "bbb+" to subordinated debt, "bbb" to trust preferred securities and "bbb" to preferred stock, all of which may be issued under PFI's recently re-filed shelf registration. The outlook assigned to all ratings is negative. The ratings on PFI's domestic life/health insurance companies and existing debt securities are unchanged.

The proceeds from the debt issuance are expected to be used for general corporate purposes including making loans and capital contributions to PFI's affiliates. The recent $1.25 billion equity raise combined with the $1 billion debt offering significantly enhanced PFI's financial flexibility and has only a minor impact on the group's financial leverage, which is within A.M. Best's guidelines for the current ratings. A.M. Best notes that PFI's increased usage of operating leverage over the past several years (though recently reduced) coupled with dampened operating earnings has resulted in reduced fixed charge coverage.

Despite recent improvement in the equity markets, A.M. Best notes the potential for continued operating and capital volatility within the company's individual annuity and asset management businesses. Additionally, A.M. Best expects significant credit losses within PFI's investment portfolio. However, the $2.25 billion capital raise together with the monetization of the gain of PFI's interest in the Wachovia joint venture and other capital management initiatives should significantly mitigate anticipated pressures on capitalization levels, especially if capital is downstreamed to PFI's operating subsidiaries.


The ratings recognize the considerable diversity in PFI's business mix within its insurance, investment and international divisions as well as its strong global market presence. Moreover, A.M. Best believes PFI and its operating subsidiaries have strong liquidity including access to commercial paper programs, committed credit lines, membership in the Federal Home Loan Bank of New York and access to the Federal Reserve's Commercial Paper Funding Facility, which is available through October 2009.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.





A.M. Best Company

Analysts:

Rosemarie Mirabella, 908-439-2200, ext. 5892

rosemarie.mirabella@ambest.com

or

Andrew Edelsberg, 908-439-2200, ext. 5182

andrew.edelsberg@ambest.com

or

Public Relations:

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com

Source: A.M. Best Company