TEXT - Fitch rates Charles Schwab Corp snr unsecured notes
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.