S&P sees Gain Capital as good strategic fit for INTL FCStone

Maria Nikolova

S&P Global Ratings has assigned its ‘BB-‘ rating to INTL FCStone Inc.’s new $350 million senior secured second-lien notes.

Further to yesterday’s announcement by INTL FCStone that it will offer $350 million in aggregate principal amount of Senior Secured Notes due 2025, S&P Global Ratings has assigned its ‘BB-‘ rating to INTL FCStone’s new senior secured second-lien notes.

Let’s recall that INTL FCStone intends to use the net proceeds from the sale of the notes, together with cash on hand, to fund the cash consideration for the acquisition of GAIN Capital.

S&P explains that it rated the new senior secured second-lien notes ‘BB-‘, in line with the issuer credit rating, to reflect that the level of priority debt from the firm’s term and revolving credit facilities is not excessive. S&P expects the amount of second-lien debt to not exceed the amount of holding company assets available to the second-lien debtholders.

S&P has also affirmed its ‘BB-‘ issuer credit rating on the firm. The affirmation reflects that S&P sees Gain Capital as “a good strategic fit for INTL, with no material erosion in funding or liquidity”. Although pro forma for the acquisition, the risk-adjusted capital (RAC) ratio is slightly below 8%, S&P expects INTL to operate Gain with lower market risk than it operated with as an independent company.

Given that both firms’ profitability has benefited from higher market volatility so far in 2020, S&P believes that retention of improved earnings and lower market risk at Gain as part of INTL will support a RAC ratio above 8%.

Finally, S&P say they believe that Gain’s market risk will be reduced once it is on INTL’s clearing platform, from a combination of increased internalization of orders, portfolio diversification when combined with INTL’s other trading activities, and reduced hedging costs. S&P also expects INTL to operate this business more similarly to its other principal trading businesses, with lower market risk tolerance.

Read this next

Executive Moves

Avelacom appoints Timothy Wong to run new Hong Kong office toward APAC expansion

Avelacom helps to achieve sub-millisecond speed of market data and order execution across both derivatives exchanges and crypto markets.

Executive Moves

XS.com hires Ahmed Negm, a popular market analyst on CNBC, Sky News, Bloomberg’s Asharq

“Ahmed’s expertise and passion for understanding the intricacies of the financial markets will be invaluable as we continue to grow our client base and expand into new jurisdictions.”

Institutional FX

ATFX uses blockchain to help clients verify IBs and vice versa

ATFX said it has been working on the IB verification project for a few months.

Industry News

Research market in dire straits as SEC’s ‘no-action’ letter on MiFID II lapses in June – survey

“Of all the regulatory news that has hit the research market in the last few months, this is the one change that will fundamentally impact what fund managers can access and pay for in future.”

Executive Moves

Wombat appoints ex-abrdn Richard Charnock as UK platform turns to Europe

Launched in 2019, Wombat provides a dedicated mobile investing platform – available on both iOS and Android – offering users both range and choice.

Institutional FX

Broadridge integrates Point Focal’s pre and post-market reports

“Point Focal provides a unique lens on the market which will help add alpha to the trading process and these new insights will rapidly improve performance while mitigating execution risk and simplify trading.”


XCritical integrates with Brokeree Solutions, allowing its clients to launch copy trading 

The forex software provider – XCritical, has integrated Social Trading by Brokeree Solutions into their CRM system.

Industry News

HKEX partners with Saudi exchange for cross listings, ESG, Fintech

“The Kingdom of Saudi Arabia, and the broader Middle Eastern region, are one of the world’s most dynamic and exciting economic and innovation hubs and also home to some of the fastest growing investor groups in the world. Hong Kong and HKEX’s markets offer significant opportunities for international investors and corporates, including unrivalled connectivity to the Mainland Chinese markets through our unique Connect programmes. This agreement signals the beginning of even greater collaboration between our companies and our home markets, and we look forward to exploring many future areas of cooperation.”

Executive Moves

CMC Markets Connect relocates APAC team led by Peter Foster to Singapore

“Singapore is a vibrant city and is now undoubtedly seen as Asia’s leading financial hub. The decision to bolster the CMC Markets Connect team here will help us cement the company’s position as a leading provider of multi asset liquidity and comprehensive trading solutions across the region.”