Shortly after investment banking giant Morgan Stanley completed its $11 billion stock acquisition of online broker E*Trade Financial, S&P Global Ratings assigned a ‘BBB+’ issuer credit rating to E*TRADE Financial.

S&P explains that it views the transaction as a long-term positive for Morgan Stanley because it bolsters and diversifies the company’s revenue stream, increasing its less risky wealth management business. S&P believes E*TRADE will add to Morgan Stanley’s low-risk, yet profitable, wealth management business.

The stable outlook on E*TRADE Financial, LLC and E*TRADE Bank mirrors that of the Morgan Stanley group. It reflects S&P’s expectation that the subgroup of operating subsidiaries underneath E*TRADE Financial, LLC, including the bank, will remain core to the ultimate parent over at least the next 24 months.

The stable outlook on Morgan Stanley and its rated subsidiaries reflects S&Ps expectation that whereas the company’s earnings and asset quality will likely deteriorate significantly due to the impact of the coronavirus pandemic, it will remain profitable and maintain good capital and liquidity over the next two years.

As FX News Group has reported, the all-stock transaction, in which E*Trade shareholders received 1.0432 Morgan Stanley shares for each share of E*Trade, was valued at the time of the deal at $11.06 billion. That is down by more than 10% from the planned deal value of just under $13 billion, as Morgan Stanley shares have declined from about $56 when the transaction was first announced in February, to their close of $47.97 on October 2, 2020.