Moody's ups E*Trade notes to A1

Moody's Investors Service said it upgraded to A1 from A3 the ratings on three senior unsecured notes issued by E*Trade Financial Holdings, LLC and assigned a stable outlook to the notes' ratings. Moody's also withdrew all its E*Trade Bank ratings and assessments.

This rating action follows E*Trade’s merger with and into a Morgan Stanley subsidiary and the merger of E*Trade Bank into Morgan Stanley Private Bank, NA. “Moody's said MS' ratings and outlooks and its other subsidiaries' ratings and outlooks were unaffected by today's rating action,”

The agency said it boosted E*Trade's three senior unsecured notes ($600 million 2.95% due in 2022, $400 million 3.8% due in 2027 and $420 million 4.5% due in 2028) because MS now guarantees the notes.

“In Moody's view, given implicit support along with the guarantee which reflects the attributes of credit substitution, the E*Trade notes are now rated at the same level as the senior unsecured debt issued directly by MS and have the same stable rating outlook,” the agency said.

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