KBRA Affirms Ratings for BGC Group, Inc.

KBRA affirms the issuer and senior unsecured debt ratings of BBB for New York, NY-based BGC Group, Inc. (“BGC” or “the company”), 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 Stable.

The ratings are underpinned by management’s long record of producing mostly consistent operating results, adapting to market evolution as evidenced by being an early mover to the electronification of trading, and ongoing emphasis on risk and liquidity management.

Profitability has improved in recent periods in conjunction with the overall increase in capital markets trading volumes and volatility, together with steady contribution from its Fenics electronic suite of businesses as well as a growing contribution from energy, commodities, and shipping. High compensation expenses (cash and non-cash) have historically weighed on bottom line earnings; adjusted for equity-based compensation, profitability is commensurate with the rating category. KBRA anticipates that the unrelenting growth in global debt – especially governmental – will create ongoing brokerage, trading, and hedging opportunities within BGC’s key markets businesses and its newly created exchange enterprise (FMX).

Leverage, perennially managed in the 2.5x range (Debt/Adj. EBITDA), further supports the ratings. 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.

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