Standard & Poor’s cut its outlook Friday on three institutional brokers, warning they could be in for an extended period of pain, while at the same time acknowledging a reduction in risk and leverage at all three.
The ratings agency loweredits outlooks for Jefferies Group and Cantor Fitzgerald to “negative” from “stable” and also, put its BBB- rating on GFI Group on Creditwatch negative.
It should come as no surprise to anyone tracking the markets that investment banking—and bankers—have been suffering.
Layoffs and shrinking bonuses are two of the more obvious indicators of an industry in flux. What might be different is the wary tone of the ratings agency's language.
The following is an excerpt from Standard & Poor's release:
We believe that brokers with institutional sales and trading and investment banking businesses are likely to face a prolonged period of low profitability and possibly other financial pressures because of ongoing weakness in the financial markets.