New Issue: E*Trade sells $400 million seven-year notes to yield 8%

By Paul A. Harris

St. Louis, June 2 - E*Trade Financial Corp. sold $400 million of seven-year senior notes (B1/B+) at par on Wednesday to yield 8%, according to a syndicate source.

Price talk was 7½% to 7¾%.

Morgan Stanley ran the books on the Rule 144A/Regulation S issue, which included registration rights. The co-managers were Credit Suisse First Boston, Deutsche Bank Securities and Sandler O'Neill.

Proceeds will be used to fund the redemption of $162.5 million of convertible subordinated notes, including either or both the 6% notes due 2007 and the 6¾% notes due 2008, and for general corporate purposes.

The issuer is a New York City-based online brokerage company.

Issuer:	E*Trade Financial Corp.
Amount:	$400 million
Maturity:	June 15, 2011
Security description:	Senior notes
Bookrunner:	Morgan Stanley
Co-managers:	Credit Suisse First Boston, Deutsche Bank Securities, Sandler O'Neill
Coupon:	8%
Price:	Par
Yield:	8%
Spread:	359 basis points
Call features:	Callable after June 15, 2008 at 104, 102, par on or after June 15, 2010
Equity clawback:	Until June 15, 2007 for 35% at 108
Pricing date:	June 2
Settlement date:	June 8
Ratings:	Moody's: B1
	Standard & Poor's: B+
Distribution:	Rule 144A and Regulation S with registration rights
Price talk:	7½% to 7¾%

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