According to the report, Jefferies has a total debt to capital ratio of 90.4%, significantly higher than its closest peers. Goldman Sachs (GS) and Morgan Stanley (MS) have similar ratios near 88%, but they are significantly larger and have some federal support via their banking charters.
According to the agency, if Jefferies raises $1 billion in equity and reduces assets by $5 billion, it will reduce total debt to capital to only 86%.
"We will cut without major deleveraging," the firm said. Earlier this month, Egan Jones downgraded the firm's rating by a notch to BBB minus.Jefferies has been battling rumors about its survival after MF Global (MFGLQ.PK) filed for bankruptcy last month. Egan Jones has also cited the increased scrutiny on medium-sized brokers following the bankruptcy as one reason for its recent downgrade. Jefferies' management has since been in a communication overdrive in a bid to allay fears over its exposure to Europe.
>To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: email@example.com.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV