With its credit at risk of being downgraded to junk status and reports that it has hired advisors to work on a potential sale, MF Global (NYSE: MF) may need to execute a sale sooner rather than later. That is the analysis in a report released today by investment bank Keefe, Bruyette & Woods (KBW).
The report stated, “We believe a potential sale must occur in days, not weeks, in order for management to get maximum value of the customer portfolio of assets to be transferred.”
MF Global includes its Futures Commission Merchant business and a broker dealer. KBW analyst Niamh Alexander noted in the report that MF Global would likely have an easier time finding buyers for its FCM business as opposed to its broker dealer arm. The report says a sale could net shareholders anywhere between $0 and $5, but is biased to the lower end of that estimate with a $2 price target. MF Global stock was trading at $1.65 as of noon today.
MF Global dropped approximately 50% (from $3.55 to $1.86) on Tuesday following a disappointing second quarter earnings report. Since then, a Wall Street Journal story indicated that they had hired advisors to help with a potential sale and Standard & Poor’s has placed its credit rating on watch and could downgrade it to junk status.