In Brief: B of A Marketing a $1B Schwab Credit

Bloomberg News

NEW YORK - Bank of America Corp. held a lenders meeting in San Francisco this week for a $1 billion credit line it is arranging for Charles Schwab Corp., the world's biggest discount brokerage.

The one-year loan refinances and increases a $600 million, one-year line arranged by Bank of America last year and a $175 million revolving credit from 1998. The loan has a yield five basis points higher than the company's existing line, at 40 basis points more than the London interbank offered rate, or Libor.

With three-month Libor, the most common base rate for loans, currently at 6.76%, that represents a total yield of 7.16%. The fee on parts of the loan that are not used is 9 basis points.

In a related development, Moody's Investors Service placed all the Charles Schwab credit ratings on review for possible upgrade, to reflect the firm's transformation from a discount broker, catering to small investors, into a leading U.S. brokerage firm that serves many customer segments, Moody's said.

Schwab's pending $3 billion acquisition of U.S. Trust Corp., the New York-based money manager for millionaires, should help the firm get more affluent customers, Moody's said. Schwab currently has a senior unsecured debt rating of A3 from Moody's, four notches above junk status.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER