Banc of America Starts Covering CBOT With a Sell

Says the company, which operates trading marketplaces for mainly interest rate products, is vulnerable to the rising cost of borrowing

Banc Of America started covering CBOT Holdings (BOT ) with a sell rating and $92 price target, citing the financial company's susceptibility to interest rate trends.

Analyst Chris Allen says that over 80% of the company's volumes come from operating trading marketplaces in interest rate products. He sees likely positive catalysts for CBOT's growth in 2006 (the re-introduction of 30-yr Treasury bonds and increased government borrowing, for example), but there could also be some meaningful negative headwinds (such as rising interest rates) which leads him to remain cautious. He doesn't believe current valuations are properly discounting the possible headwinds he sees in 2006 and/or the expectation for a fairly volatile earnings stream.

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