OREANDA-NEWS. Fitch Ratings has affirmed Cantor Fitzgerald, L. P.'s (Cantor) Long - and Short-Term Issuer Default Ratings (IDRs) at 'BBB-' and 'F3' respectively. Its senior unsecured debt has been affirmed at 'BBB-'. The Long-Term IDR Outlook is Stable.

Fitch has simultaneously affirmed BGC Partners, Inc.'s (BGC) Long-Term IDR at 'BBB-' with a Stable Outlook. BGC is a consolidated subsidiary of Cantor, which acts as an inter-dealer broker (IDB) and commercial real estate broker and whose ratings are equalised with those of Cantor. For more information on these rating actions see the rating action commentary titled 'Fitch Affirms BGC at 'BBB-', Outlook Stable' dated 30 September 2016 on www. fitchratings. com.

KEY RATING DRIVERS

IDRS AND SENIOR DEBT

The ratings reflects the established position of Cantor in the middle-market brokerage space, increasing business diversification, a moderate risk profile, its controlled leverage, and adequate liquidity. The ratings are constrained by the cyclicality of Cantor's capital markets and real estate activities, resulting in periods of more volatile performance. The ratings are also held back by structural challenges in the core broker-dealer and IDB businesses, by reputational risk associated with non-core ventures and by key man risk associated with Cantor's CEO.

Operating performance in Cantor's core institutional brokerage business, excluding BGC (which merged with GFI Group Inc. (GFI) in January 2016), and Cantor Commercial Real Estate (CCRE), has been fairly weak, as overall market conditions remain challenging.

On a consolidated basis, Cantor was profitable in 2015 and 1H16, helped by earnings of consolidated subsidiaries and acquisition/disposal gains. Nevertheless, pre-tax income and margins in 1H16 were weaker relative to 2015 and 2014 due to higher expenses, some of which were one-time in nature related to the GFI acquisition.

Cantor's adjusted leverage ratio (defined as adjusted assets to Fitch Core Capital (FCC)) increased during 2015, as acquisition and divestiture activity in Cantor's IDB business affected goodwill. That resulted in adjusted leverage ratio remaining at the top of historical range of 8x-12x for the financial year ended June 2016, but consistent with Fitch's 'BBB' rating category benchmark of 10-15x for balance sheet-intensive securities firms.

Gross leverage is viewed as appropriate for the ratings, particularly as the company operates a matched repurchase (repo) book primarily backed by U. S. Treasuries, agencies and agency MBS securities.

Liquidity is sufficient, as Fitch believes that consolidated liquid assets, comprising cash, cash equivalents and unencumbered marketable securities, $$should be sufficient to fulfill the institution's operating needs particularly in the context of manageable debt maturities over the next two years, following the refinancing of $300 million debt with a new $375 million issue in June 2015. The company also contracted a $150million unsecured credit facility available up to August 2017.

RATING SENSITIVITIES

IDRS AND SENIOR DEBT

Cantor's ratings remain sensitive to material deterioration in operating performance of the institutional brokerage or real estate business; Additionally a material increase in leverage, adverse changes in the reverse repo book composition or an abrupt departure of its CEO could cause a negative rating action. The ratings are also sensitive to reputational risk potentially associated with Cantor's non-core ventures. Cantor's ratings also remain sensitive to changes in BGC's ratings.

Positive rating momentum, viewed as limited in the near term, could be driven by continued business diversification that materially increases earnings stability over an extended period while maintaining conservative leverage and liquidity. Similarly, sustained improvement in institutional brokerage margins could over time be positive for the ratings.