Cboe Global Markets

The stable outlook reflects S&P Global Ratings' expectation that Cboe will sustain leverage below 1.75x. We expect the financial safeguards at EuroCCP will not weaken with the growth in the trading and clearing offering in European equity derivatives. We could lower the ratings if: Leverage exceeds 1.75x following a series of acquisitions or aggressive financial policies, or Financial safeguards at EuroCCP unexpectedly weaken. We could raise the ratings if Cboe keeps reducing its dependence on flagship products and transaction-based revenue while maintaining financial safeguards at EuroCCP. We expect U.S. GDP growth of 2.4% in 2023, 1.5% in 2024, and 1.4% in 2025. While GDP does not affect trading volume for financial market infrastructure firms (FMIs), we believe healthy growth supports

...In our view, Cboe Global Markets maintains a leading position among options exchanges in the U.S. It has a 99% market share in index equity options and an approximately 33% market share overall in the year to date through October (including single-name equity options). We expect the company to remain more dependent than peers on volatile trading revenue. Transaction-related revenue represented about 71% of net revenue for Cboe in the first nine months of 2023--far above the levels for Nasdaq and Intercontinental Exchange. We continue to view Cboe's low leverage as a credit strength. Leverage, as measured by S&P Global Ratings-adjusted debt to EBITDA, improved to 1.2x as of Sept. 30, 2023 after spiking to 1.7x a year ago (due to the partially debt-funded acquisitions of ErisX and Neo). We believe the company benefits from providing three of the most widely recognized financial products traded and used globally: VIX futures, VIX options, and S&P 500 options. Overall index options and futures...

Full Report