Prudential Financial Insurance (PFI) is marketing a new hybrid deal that according to market reports is backed by subprime residential mortgage backed securities and guaranteed by the insurer.

The deal called Covered Trust 2012-1 is being marketed as a 144A transaction. Deutsche Bank Securities is the lead manager on the deal. Barclays Capital and Wells Fargo Securities are bookrunners on the deal.

Standard & Poor's has assigned the deal a preliminary rating of 'A'. The  rating on the notes relies solely on the rating of PFI, therefore any change in the rating of PFI impact the rating of the notes.

The insurance company will guarantee principal and interest payments on the class A notes when due, as well as unexpected expenses, according to an S&P presale report.

The proceeds from the sale of the notes are being used to purchase pool of residential mortgage-backed securities from The Prudential Insurance Co. of America. 

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