KBRA Assigns Ratings to Clear Street Holdings LLC

NEW YORK--(BUSINESS WIRE)--KBRA assigns issuer and senior unsecured debt ratings of BBB- to New York, NY based Clear Street Holdings LLC ("CSH"). The Outlook for the ratings is Positive.

Support for the ratings encompasses the experienced management team that includes risk management, prime brokerage, and financial and treasury management personnel with specialized capital markets expertise. The deliberately constructed and differentiated technological foundation and suite of cloud-based applications that encapsulate real-time performance and risk measurement further anchor the ratings and appear well suited to manage key risk elements (market, credit, liquidity), especially in an environment of elevated market volatility and overall complexity.

CSH's historical consolidated earnings performance, while somewhat uneven, reflects the contours of capital markets activity, as well as the recent emergence of the synthetic equity finance business, divestitures, and costs associated with investment and business build-out (asset class and product expansion, including fixed income and futures finance & clearing, as well as international expansion). Collateralized and synthetic equity finance and other spread margins are roughly commensurate with KBRA rated peers. KBRA notes that the recent trend in revenue performance exhibits signs of development and diversification from organizational build.

Financial leverage on a parent only basis is currently low, and interest coverage tied to existing corporate senior unsecured debt was 12x for FY2024. Cash at 4Q24 covered 1.5x annualized interest expense; dividend capacity at the broker-dealer and security-based swaps dealer subsidiaries are plentiful. The largely overnight and matched collateralized finance book, available collateral margin capacity, term debt maturities, and sizeable committed lending capacity support the consolidated liquidity and funding profile.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• Financial Institutions: Securities Firm Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1009424