Cantor Fitzgerald LP, the brokerage whose credit rating was cut twice last year, faces another potential downgrade amid a slump in trading, Fitch Ratings said.
Fitch may lower Cantor’s credit grade from BBB, which is two levels above junk, the ratings company said today in a report. Revenue has declined for Cantor’s institutional equity business and inter-dealer broker affiliate BGC Partners Inc.
“Cantor’s institutional business and BGC’s financial brokerage business will remain challenged in the medium term because of lower trading volume,” Mohak Rao, a Fitch analyst, wrote in the report. The rating may be lowered if Cantor’s profits decline and it doesn’t pay down its debts, Rao wrote.
Cantor, led by Chief Executive Officer Howard Lutnick, 51, has been expanding from its historical role as a middleman for stocks and bonds into mortgages, emerging markets, commercial real estate and casino gambling. Moody’s Investors Service reduced New York-based Cantor to junk in October after the brokerage stopped providing it with information.
Standard & Poor’s last month cut Cantor one level to BBB-from BBB, saying competition and the firm’s expansion plans are pressuring profit. Cantor is a private partnership and doesn’t report financial results.