KBRA affirms the issuer and senior unsecured debt ratings of BBB for New York, NY-based BGC Partners, Inc. (“BGC” or “the company”). 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, and ongoing emphasis on risk and liquidity management. The agency brokerage business model that obviates the need for significant inventory/investments risk positions also reinforces the ratings.

Profitability, while modest at times, is on an improving trend due to the overall increase in capital markets volatility, which KBRA expects to persist for the foreseeable future. High compensation expenses (cash and non-cash) have historically weighted on bottom-line earnings; however, adjusted for equity-based compensation profitability is commensurate with the ratings.

Leverage in the 2.5x range (Debt/Adj. EBITDA) has been managed consistently. BGC remains adequately funded; unsecured debt is well laddered and has been issued at a reasonable cost. Cash coverage of short-term obligations (excluding unsecured debt maturities) remains solid. Contingent funding vis-à-vis a committed line of credit has increased commensurately with the growth in the overall business.

KBRA believes the unrelenting growth in global debt – public and private – will create ongoing brokerage revenue opportunities from a volume and volatility perspective especially as it relates to rates and FX, key product segments for BGC. The potential for further commoditization of securities trading and brokerage could pose a competitive threat, longer term; however, BGC’s leadership in the electronification of trading and associated services, some of which are customized, demonstrates its capacity to adapt to market and technological changes and differentiate itself to clients.

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Methodologies

Financial Institutions: Securities Firm Global Rating Methodology

ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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