TEXT - Fitch rates Charles Schwab Corp snr unsecured notes

Tue Dec 4, 2012 10:05am EST

Dec 4 - Fitch Ratings rates Charles Schwab Corporation's 
(SCHW) $350 million of senior unsecured notes 'A'. 

SCHW recently announced its intention to redeem its $494m of senior notes 
maturing in 2014. Fitch believes this redemption and the new $350 million 
issuance is an attempt to improve funding costs in the attractive capital 
markets environment. The new notes have a 0.85% coupon per annum, 52 basis 
points over the three-year U.S. Treasury, and will mature on Dec. 4, 2015.

RATING DRIVERS AND SENSITIVITIES 

SCHW's Stable Rating Outlook reflects the expectation for reasonably stable 
earnings, stable leverage metrics, and continued growth from Schwab Bank (SB) as
well as the company's asset management businesses. Fitch notes that SCHW's 
earnings have improved amid a challenging interest rate environment and volatile
equity markets. 

Fitch notes that SCHW's overall business model is very scalable, and could show 
meaningful earnings growth with improved financial market and interest rate 
environments. However, from a credit perspective this elevated sensitivity to 
stock market trends and interest rates constrains longer-term upwards ratings 
potential. 

Ratings could come under pressure if SCHW were to lose significant clients from 
poor investment performance or operational errors, or if overall credit 
metrics--including those at SB--were to begin to meaningfully deteriorate. 
Additionally, should the loan portfolio mix at the bank become less 
conservative, ratings could be impacted.

SCHW and its subsidiaries provide securities brokerage and related financial 
services to individuals and institutional clients. The two primary operating 
entities include Charles Schwab & Co., Inc., a securities broker-dealer and 
Charles Schwab Bank, which offers mortgage loan and deposit services to clients.

Fitch assigns the following rating: 

Charles Schwab Corporation
--Senior unsecured debt 'A'.

Fitch currently rates Schwab as follows: 

The Charles Schwab Corporation
--Long-term Issuer Default Rating (IDR) 'A';
--Short-term IDR 'F1';
--Senior unsecured notes 'A';
--Short-term debt at 'F1';
--Preferred stock at 'BB+'
--Support '5'; and
--Support Floor 'NF'.
The Rating Outlook is Stable.
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