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Moody's affirms E*TRADE Financial, E*TRADE Bank following OptionsHouse deal announcement

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Moody's affirms E*TRADE Financial, E*TRADE Bank following OptionsHouse deal announcement

Moody's affirmedE*TRADE Financial Corp.'sBaa3 issuer rating.

The rating agencyalso affirmed E*TRADE Bank'sBaa3 issuer rating, A3 long-term deposit ratings and P-2 short-term deposit ratings.

The outlookremains stable.

The ratingsactions follow E*TRADE Financial's announcementthat it agreed to acquire Aperture New Holdings Inc., the ultimate parent of onlineoptions broker OptionsHouse.

Moody's saidE*TRADE's acquisition of OptionsHouse would provide it with a platform to reinforceits options trading products, an area where it has historically lagged its peers.The rating agency added that E*TRADE's key credit metrics should remain firmly ininvestment-grade territory on a pro forma basis after the transaction closes, withdebt-to-EBITDA at about 1.5x at the outset of the transaction, from 1.3x at June,and interest coverage to drop to 9.8x from 13.6x for the trailing 12 months at June2016.

The rating agencyalso said the purchase will expand E*TRADE's product offering to active traders,and that the president of OptionsHouse, who was formerly with E*TRADE, will jointhe combined company, which Moody's sees as a factor that will help mitigate executionrisk.