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Citigroup Inc. Message Board

  • bid100k bid100k Mar 7, 2011 12:34 PM Flag

    Moody's downgraded C, upgraded ETFC

    Moody's Lifts E*Trade Rating A Notch, Citing Loan PortfolioFont size: A | A | A10:37 AM ET 3/3/11 | Dow Jones

    Moody's Investors Service upgraded E*Trade Financial Corp.'s (ETFC) junk-level credit rating a notch, citing improving stability in its loan portfolio, stronger regulatory capital ratios and better financial flexibility at the company level.

    Shares of the company were up 2.3% to $15.93 recently.

    With a B2 rating, the online brokerage is five steps below investment-grade territory.

    The ratings agency said declining delinquencies in E*Trade's mortgage portfolio in each of the past four quarters has contributed to the company's flexibility despite the portfolio's "generally poor underwriting quality."

    Moody's also said a conservative estimate of the company's operating performance suggests its bank would maintain its capacity to hand up dividends to the parent company, allowing it to service its $2.3 billion of debt, including $1.6 billion in interest-bearing debt. The company's ability to extract dividends from the bank will remain subject to regulatory approval, Moody's added.

    Moody's last acted on E*trade on July 27, when it changed the company's outlook to stable from negative.

    The company in January posted a narrower fourth-quarter loss on declining delinquencies across its bank's loan portfolio, but its loan-loss provision climbed 28% from the third quarter, reflecting a cautious outlook by the company on its mortgages.

    -By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;

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