S&P Raises SACP on TD Ameritrade Holding (AMTD) to 'a-'

Standard & Poor's Ratings Services today said it affirmed its 'A' long-term issuer credit and senior unsecured debt ratings on TD AMERITRADE Holding Corp. (NYSE: AMTD) (TDA). At the same time, we raised our stand-alone credit profile (SACP) to 'a-' from 'bbb+'. The rating outlook is stable.

The ratings affirmation reflects our opinion of TDA's stand-alone creditworthiness and the firm's strategic importance to Toronto-Dominion Bank (TD Bank), which owns approximately 40% of TDA.

"The SACP is based on our opinion of the stand-alone creditworthiness of TDA as if it was one legal entity," said Standard & Poor's credit analyst Robert Hoban.

To derive the issuer credit rating on TDA, we apply two notches of uplift for its "strategically important" group status, then notch down one to reflect that TDA is a nonoperating holding company, structurally subordinated from its regulated operating subsidiaries.

We raised our SACP assessment on TDA to reflect management's commitment to grow tangible equity, along with the expansion of its fee-based investment advisory business, which has strengthened the stand-alone business and financial risk profiles. The affirmation reflects that TDA's strategically important status to TD Bank is already fully reflected in our issuer credit and debt ratings on TDA. Although TD Bank does not provide specific ongoing financial support to TDA, we believe such support would likely be forthcoming if necessary, given TDA's importance to TD Bank's expansion strategy and their shared branding, technology, and risk management.

"The stable outlook reflects our opinion that TDA will maintain a solid financial profile with good operating performance, liquidity, and capitalization, as well as minimal principal risk," said Mr. Hoban.

We could again raise our SACP assessment on TDA if management expands its lower-risk operations and improves the total equity-to-AA ratio above 10% on a sustained basis, or if TD Bank were to materially increase its ownership or otherwise demonstrate a commitment to TDA in line with a "highly strategic" or "core" group status. Conversely, we could lower the ratings if TD Bank reduced its ownership in TDA or otherwise indicated it had reduced its commitment to TDA to less than necessary to maintain the "strategically important" designation, or if ATE/AA were to fall below 6%, or if the financial profile deteriorated such that we lowered the SACP by at least two notches.

You May Also Be Interested In

• Truist Upgrades Strategic Education (STRA) to Buy, 'USHE Enrollment Growth To Unlock Significant Margin Leverage'
• Global S&P Futures mixed in premarket
• Maxim Group Starts The Lovesac Co. (LOVE) at Buy