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In a strategic financial move, Principal Financial Group Inc. (NASDAQ:PFG), a $19.36 billion financial services provider with a "GOOD" financial health rating according to InvestingPro, announced today its intention to exercise a put option, leading to a series of transactions involving its pre-capitalized trust securities and senior notes. The company, currently trading at $85.90, appears undervalued based on comprehensive analysis from InvestingPro’s Fair Value model.
The Des Moines-based financial services provider, which specializes in accident and health insurance and has maintained dividend payments for 24 consecutive years with a current yield of 3.51%, disclosed its plan to initiate full exercise of the put option related to its 4.111% pre-capitalized trust securities (the "2028 P-Caps") set to mature on February 15, 2028. This action is contingent on the successful offering, sale, and settlement of new pre-capitalized trust securities with a maturity in 2055.
Principal Financial Group intends to issue $400 million in aggregate principal amount of its 4.111% Senior Notes due 2028 to High Street Funding Trust I in exchange for a portfolio of U.S. Treasury securities held by the Trust. Following this exchange, the company will waive its right to repurchase the 2028 Notes and direct the dissolution of the Trust, which will result in the 2028 Notes being delivered pro rata to the beneficial holders of the 2028 P-Caps.
The proceeds from this transaction are earmarked for the redemption or repayment of all $400 million aggregate principal amount outstanding of its 3.400% Senior Notes due on May 15, 2025, before their maturity date, in accordance with the terms of the indenture governing the 2025 Notes.
This report, based on a press release statement, serves purely for informational purposes and does not constitute a commitment to proceed with the put option exercise, the offer of sale or the solicitation of an offer to buy any 2028 Notes, nor does it represent a notice of redemption for any 2025 Notes or an offer to sell or buy any pre-capitalized trust securities or other securities. The completion of any new issuance of pre-capitalized trust securities, the exercise of the 2028 Put Option, and the redemption of any 2025 Notes are subject to various conditions and cannot be assured.
Forward-looking statements in the report are based on current expectations and beliefs about future events which may not come to fruition as predicted. Principal Financial Group has highlighted that actual results may vary due to a range of factors and uncertainties, as detailed in its regulatory filings, including its Annual Report on Form 10-K for the year ended December 31, 2024. The company emphasizes that it is not obliged to update any forward-looking statements. With revenue growth of 18.02% in the last twelve months and six analysts revising earnings upward for the upcoming period, InvestingPro subscribers can access detailed analysis and 12+ additional ProTips about Principal Financial Group’s future prospects through comprehensive Pro Research Reports.
In other recent news, Principal Financial Group reported its assets under management (AUM) at $712.1 billion as of December 31, 2024. This figure includes $559.1 billion managed by Principal Asset Management - Investment Management and $124.3 billion by Principal Asset Management - International Pension. JPMorgan recently upgraded Principal Financial’s stock from Neutral to Overweight, citing an improved outlook for operating trends and a more attractive valuation compared to peers. However, Wells Fargo (NYSE:WFC) downgraded the company’s stock from Equal Weight to Underweight, expressing concerns over challenges in the Retirement and Income Solutions (RIS) and Principal Global Investors (PGI) segments. The firm also lowered its earnings per share (EPS) estimates for 2025 and 2026. Similarly, Morgan Stanley (NYSE:MS) downgraded Principal Financial’s shares to Underweight, highlighting potential overvaluation and slower growth prospects in the Principal Global Investors and Principal International sectors. The firm also noted that the company’s trading multiple suggests it may be overvalued relative to its peers. These developments reflect differing analyst opinions on the company’s future performance and valuation.
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