Fitch to rate Scottrade debt BBB-

Fitch Ratings said it expects to assign a BBB- rating to Scottrade Financial Services, Inc.'s pending senior debt offering of up to $500 million.

On June 23, Fitch downgraded the long-term issuer default rating of Scottrade to BBB- from BBB. The outlook is stable.

Scottrade's issuance will be used to capitalize Scottrade Bank in order to transition customer deposits to the bank rather than placing client uninvested cash with unaffiliated banks, the agency said. The increase of spread income from the existing customer base will enhance revenue opportunities for Scottrade.

An expanded banking franchise does bring other operating risks not previously prevalent at Scottrade, the agency added. Anticipated holding company debt service will come from earnings at the bank being upstreamed to the parent.

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