Moody’s might lower GFI Group

Moody's Investors Service said it placed GFI Group Inc.'s B1 long-term issuer and senior unsecured debt ratings on review for downgrade following the termination of the Chicago Mercantile Exchange's (Aa3/stable) agreement to buy the company.

Previously, the agency was reviewing GFI's ratings for upgrade based on the terms of the merger agreement that included Chicago Mercantile assuming GFI's obligations. On Jan. 30, GFI and Chicago Mercantile announced the termination of their merger agreement.

Moody's said that there is increased uncertainty about GFI's strategic direction. The company announced that it is pursing other strategic alternatives including joint ventures, mergers and/or acquisitions. The agency believes that a prolonged lack of strategic clarity may lead to an erosion of franchise value resulting from potential customer and employee defections.

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