KBRA Affirms Ratings for Cantor Fitzgerald, L.P.
12 Apr 2024 | New York
KBRA affirms the BBB issuer and senior unsecured debt ratings for Cantor Fitzgerald, L.P. (“Cantor” or “the firm”). Domiciled in New York, NY, Cantor is a full-service, globally diverse capital markets firm with controlling stakes in wholesale brokerage and financial technology services and commercial real estate brokerage and fee service companies. The rating Outlook is Stable.
The rating is underpinned by management’s long record of producing relatively steady operating results, irrespective of the operating environment, adapting to regulatory changes and market evolution, and ongoing emphasis on risk management, as well as consistent financial leverage and liquidity management policies. Cantor’s lower risk matched-book, securities trading operation, and agency brokerage business model that contribute to both a higher quality balance sheet and comparatively stable revenue performance, also support the ratings.
Profitability, while reasonably stable as indicated above, is somewhat low for the rating, primarily due to elevated compensation expense (although a sizeable percentage is variable and non-cash). While revenue performance generally follows the contours of capital markets conditions, KBRA considers Cantor’s amalgamation of collateralized finance, agency flow trading, and various advisory services business to be sufficiently diversified to absorb an environment of subdued trading and transaction volumes.
Consistent and disciplined financial leverage management also reinforces the current ratings and remains a key factor for the rating category. Cash coverage of short-term obligations and aggregate liquid assets and contingency funding coverage of unsecured debt remains adequate. Reliance on short-term debt is low; long-term debt maturities are well laddered.
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