Principal Financial Group notes receive AM Best 'a' rating after $400 million issuance
Principal Financial Group has secured an AM Best issue credit rating for newly announced senior unsecured notes as it adds fresh long-term funding to its capital structure. The $400 million offering carries a 5.3% coupon and matures in 2037, with the rating outlook set at stable.
Highlights
- AM Best assigned a Long-Term Issue Credit Rating of 'a' (Excellent) with a stable outlook to Principal Financial Group's $400 million senior unsecured notes due 2037 at 5.3%.
- Principal Financial Group's pro forma adjusted financial leverage stands at 24%, with interest coverage deemed adequate and consistent with current ratings, per AM Best.
- Proceeds from the debt issuance will be used for general business purposes and prefunding maturities, supporting liquidity and financial flexibility with no material change in risk profile.
Debt issuance terms and rating assessment
As reported by AM Best, the ratings agency has assigned a Long-Term Issue Credit Rating of "a" (Excellent) to Principal Financial Group, Inc.'s recently announced issuance of senior unsecured notes. The new debt totals $400 million, bears a 5.3% interest rate and is due in 2037.AM Best says the outlook on the rating is stable. The agency also says Principal Financial Group's pro forma adjusted financial leverage of 24%, along with its interest coverage, is adequate and consistent with the company's current ratings.
Funding use and balance sheet implications
The proceeds from the debt sale are expected to support general business purposes and prefund upcoming maturities. That suggests the insurer is using the issuance both to preserve financial flexibility and to manage its refinancing schedule in advance.AM Best adds that the holding company's liquidity is strong. For the insurance sector, the assessment indicates the new borrowing remains aligned with Principal Financial Group's existing credit profile rather than signaling a material change in risk.
Our earlier coverage on the surge in short-term U.S. Treasury yields explained how the bond market is pressuring the Fed as investors reprice inflation risks and the outlook for policy, with two-year yields moving above the current target range. We noted that traders began factoring in the possibility of another rate hike and that the move revived debate over whether the “neutral rate” is higher than policymakers assume, keeping borrowing costs elevated across the economy.
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