KBRA Upgrades Ratings for BGC Group, Inc.

KBRA upgrades the issuer and senior unsecured debt ratings to BBB+ from BBB for New York, NY-based BGC Group, Inc. (“BGC”), a diversified holding company and market leader specializing in global wholesale brokerage, complemented by a growing financial technology platform that offers an array of products and services to various types of clients, including governments, corporations, and financial institutions, such as banks, broker-dealers, and investment advisors and funds. The Outlook for the ratings is revised to Stable from Positive following the rating upgrade.

Key Credit Considerations

The rating upgrade is driven by BGC’s track record of disciplined financial leverage, liquidity, and funds management practices. In recent years, earnings performance has been very robust, aided by management’s disciplined financial and operating policies and by a highly favorable operating environment.

Strong earnings, notably in recent periods, have been driven by the emergence of ECS and FMX, in addition to steady results in the Fenics suite of businesses, continued global debt issuance (governmental and corporate), and periodic episodes of elevated market volatility (key elements in trading volume). Investments and the ongoing development of certain businesses have benefited revenue diversification.

Leverage, perennially managed in the 2.5x range (Debt/Adjusted EBITDA), further supports the ratings improvement, and coupled with the earnings performance, has resulted in solid interest coverage metrics.

BGC remains adequately funded; unsecured debt is well laddered and has been issued at a reasonable cost. In addition, cash coverage of short-term obligations remains adequate, as do contingent borrowing facilities.

Rating Sensitivities

With the rating upgrade, further positive rating momentum is not anticipated over the intermediate-term, barring an exogenous event. Conversely, although not anticipated, the ratings would most likely come under pressure if KBRA detected a potential secular erosion in the operating fundamentals of the wholesale brokerage business or a change in management’s approach to financial leverage policies.

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