Prudential Financial Inc. (PRU:US), the second-biggest U.S. life insurer, is planning a benchmark offering of bonds it will guarantee that would also be backed by residential-mortgage securities held by one of its units, according to two people familiar with the offering.
The collateral will consist of home-loan debt with principal balances that total 2.85 times the face value of the notes being sold, said the people, who declined to be identified because the terms aren’t set. The securities are set to receive an A rating from Standard & Poor’s, one of the people said. The bonds would mature in 3.5 years and carry a projected average life of 3 years. Benchmark offerings are typically at least $500 million.
Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential, declined to comment.
The offering is more similar to so-called covered bonds than mortgage-backed securities or securitizations used to repackage them, which typically don’t carry guarantees from the issuers. Unlike most covered bonds, the Prudential notes would involve a static pool of debt, rather than a revolving set of collateral, one of the people said.
Deutsche Bank AG, Barclays Plc and Wells Fargo & Co. are managing the sale, the people said.
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