Moody’s ups E*Trade Financial debt to Ba2

Moody's Investors Service said it upgraded E*Trade Financial Corp.’s senior debt rating to Ba2 from Ba3 following the announcement that it will reduce its holding company debt load by a net $340 million.

At the same time, the agency affirmed E*Trade Bank's Ba1 deposits ratings.

The outlooks are positive.

Moody's said the debt reduction would improve E*Trade Financial’s debt service capacity, representing another significant milestone in a series of clear demonstrations of the company's successful efforts to improve its credit profile.

The company intends to use about $432 million of corporate cash, along with roughly $460 million from the issuance of new 2023 senior notes, to redeem all of its outstanding $800 million 6 3/8% senior notes due 2019 and to pay related redemption premiums.

The transactions will improve E*Trade Financial’s pro-forma debt/EBITDA to 1.6 times, from 2 times for 2014, improve its debt maturity schedule, and will significantly reduce its ongoing interest expense, Moody’s said.

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