![]() ![]() The ratings could also be downgraded with evidence that HRT's risk awareness and risk management capabilities are not operating at a level commensurate with its evolving risk environment.The principal methodology used in these ratings was Securities Industry Market Makers Methodology published in November 2019 and available at. In the longer-term, HRT's ratings could be upgraded if it: (1) controls its risk appetite and delivers strong evidence of heightened risk awareness and risk management capabilities (2) improves the quality and diversity of profitability and cash flows from the development of substantial and lower-risk ancillary business activities and (3) increases its retained capital and liquidity while reducing reliance on key prime brokerage relationships outside of US equities trading.HRT's ratings could be downgraded should evidence emerge that HRT's risk appetite is accelerating, particularly with respect to accelerated growth in regions and markets that have heightened market, operational and liquidity risks. Although diversification could be beneficial to the credit profile of firms such as HRT, this would generally be the case when such diversification results in a deeper market share in generally mature capital markets.Moody's said its change in HRT's outlook to negative from stable reflects the ongoing credit risks associated with its increased risk appetite, and related need to have heightened risk awareness and risk management techniques to mitigate its evolving risk profile.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSMoody's said that because HRT's outlook is negative, there is currently no upward pressure on its ratings. Moody's believes these factors leave HRT more susceptible to trading losses, adverse repercussions from unforeseen events and with an increased need for evolving its risk management practices to mitigate these risks.Moody's said a wider diversification of trading products across multiple geographies can increase a firm's complexity, raising challenges for management and heighten risk. Moody's said HRT's evolving trading strategies and related expansion into certain regions and markets outside of its core historical areas of focus, and which generally have a weaker market structure relative to its historical operations, have increased the risks to which it is exposed. Issuer Rating, Downgraded to Ba3 from Ba2.Senior Secured 1st Lien Bank Credit Facility, Downgraded to Ba3 from Ba2Outlook Actions.Issuer: Hudson River Trading LLC.Outlook, Changed To Negative From StableRATINGS RATIONALEMoody's said HRT's downgrade reflects evidence from the firm's recent risk appetite, and related considerations pertaining to risk management, not commensurate with its previous rating level. Corporate Family Rating, Downgraded to Ba2 from Ba1. Moody's also changed HRT's outlook to negative from : Hudson River Trading LLC. Rating Action: Moody's downgrades Hudson River Trading (Ba2 CFR) and changes outlook to negative from stableGlobal Credit Research - New York, Aug- Moody's Investors Service (Moody's) has downgraded Hudson River Trading LLC's (HRT) Corporate Family Rating (CFR) to Ba2 from Ba1, and downgraded its issuer rating and senior secured first lien term loan rating to Ba3 from Ba2. ![]()
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