KBRA Publishes Senior Unsecured Debt Rating for Millennium Consolidated Holdings, LLC

KBRA publishes the senior unsecured debt rating of BBB- with a Stable Outlook for Millennium Consolidated Holdings, LLC (“the company”). On May 9, 2018, KBRA assigned a senior unsecured debt rating of BBB- and Stable Outlook on an unpublished basis. On May 3, 2024, KBRA affirmed the senior unsecured debt rating of BBB- and Stable Outlook on an unpublished basis. At the same time, KBRA assigns a BBB- rating to the company’s $52.5 million, 8.375% senior unsecured debt issuance that matures on March 1, 2030.

Key Credit Considerations

The ratings are supported by KBRA’s favorable view of MCH’s management team and highly focused and optimized business model. Management has a proven track record in electronic fixed income trading historically, including through various operating environments. Risk management continues to be hallmark of the franchise. Policies, monitoring, and testing are all key elements; of note, risk officials generally have realized trading experience, which heightens the overall quality of the risk apparatus, in KBRA’s view. Operational risk management remains at the forefront of the company’s business model given the focus on electronic delivery and execution, though it certainly appears to be well managed, with an established favorable track record.

The lower risk, flow-oriented securities trading operation that has historically contributed to a higher quality balance sheet also support the ratings. Pro forma financial leverage is modest; in 2023, the company retired $50 million in senior unsecured debt. Short-term corporate debt is not used.

The ratings are constrained primarily by the somewhat narrow operating model, although both geographical and product diversification continues, which could portend positive ratings in the intermediate term.

Rating Sensitivities

Positive ratings would most likely develop from continued revenue diversification, geographically and by product, which would also lessen correlated trading risk. Conversely, a significant erosion in the company’s competitive position could have adverse rating implications if counterbalancing measures were not taken. A deterioration in the company’s capital and leverage profile, violation of any other applicable contractual covenants, or the emergence of unexpected operational or technology issues could put downward pressure on the ratings.

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