BGC Partners says interest rate on GFI Group notes reduced to 8 3/8%

By Tali Rackner

Norfolk, Va., Jan. 19 – BGC Partners, Inc. said the interest rate applicable to the senior notes due 2018 issued by subsidiary GFI Group Inc. was reduced to 8 3/8% per annum from 8 5/8%, according to a news release.

Before the acquisition of a majority of GFI by BGC in the first quarter of 2015, the notes were subjected to 200 basis points of additional interest due to the cumulative effect of downgrades to GFI's credit rating. This increased GFI's interest expense by $4.8 million per year.

On July 10, 2015, the company fully and unconditionally guaranteed the obligations of the notes.

As a result of BGC's guarantee, the notes were subsequently upgraded by Standard & Poor’s and Fitch Ratings to BBB- on July 13, 2015, reducing the additional interest to 25 bps. This also lowered the company's expected annual consolidated interest expense by $4.2 million.

On Jan. 13, Moody’s upgraded the notes to Ba2 from Ba3, eliminating the additional interest entirely and lowering the expected future annual consolidated interest expense by another $600,000.

In total, since the completion of BGC's tender offer for the majority of GFI's shares in the first quarter of 2015, the interest rate on the $240 million aggregate principal amount of notes was reduced to the original rate of 8 3/8% from 10 3/8%, while the related expense has been lowered by $4.8 million, all else equal.

GFI is majority-owned by, and operates as a division of, BGC Partners, a brokerage and trade execution company based in New York City.

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