Moody's Corporation

THE SCOOP

Rating the world

Founded in 1900, Moody's Investors Service remains among the most famed and widely utilized sources for credit ratings, research and risk analysis on debt instruments and securities.  In addition, Moody's provides corporate and government credit assessment and training services, credit-training services and credit software to financial institutions, with 9,300 accounts at 2,400 institutions worldwide.  The firm's ratings and analyses track 100 sovereign nations, 12,000 company insurers, 29,000 public finance issuers and 96,000 structured finance obligations.  Moody's employs approximately 3,000 people worldwide and more than 1,000 analysts.  Moody's began as part of The Dun & Bradstreet Corporation, under which it operated until September 2000.  At that point, Dun & Bradstreet split into two, publicly traded companies: Moody's Corporation and D&B Corporation.  The newly formed D&B comprised Dun & Bradstreet's business information services, and Moody's contained the remaining ratings and associated research and credit-risk management services.

Moody's ratings business consists of four groups: structured finance, corporate finance, financial institutions, and sovereign risk and public finance.  The firm's main clients include corporate and government issuers as well as institutional investors, banks, creditors and commercial banks.  While print traditionally served as the firm's primary medium, Moody's research website continues to grow in popularity.  In addition to research, current ratings and supplemental information are available online at no charge.  The company's top shareholder is billionaire Warren Buffet, who holds a 20-percent stake in the company.

Dividing in two

In August 2007, Moody's announced it would reorganize its business into two divisions: Moody's Investors Service and Moody's Analytics.  Moody's Investor Service, the company's ratings agency, performs the credit ratings and related research businesses.  Moody's Analytics brought together Moody's KMV, Moody's Economy.com and other nonrating businesses as well as the sales and marketing departments for all of Moody's.  The restructuring aimed to emphasize the independence of Moody's opinions on debt securities from its sales department.  In a related move in October 2007, the company published an updated Code of Professional Conduct for its employees.  The code implements the International Organization of Securities Commissions' Code of Conduct Fundamentals for Credit Ratings Agencies.  The revisions focused on the separation of Moody's Investors Service from the company's other commercial activities.

Acquiring for expansion

In November 2007, Moody's entered into a technical services agreement with Equilibrium, a Lima, Peru-based rating agency that provides credit rating and research services in Peru, El Salvador and Panama.  Moody's now gives Equilibrium technical support and analyst training based on credit-analysis techniques for companies, municipal governments, financial institutions and structured financings.  Equilibrium continues to provide domestic ratings services, rendering opinions on the credit worthiness of issuers and issues within the countries where it operates.  Moody's continues to assign globally comparable ratings for domestic and cross-border financings in those countries.  In December 2007, Moody's announced plans to acquire Mergent Pricing and Evaluation Services, a provider of corporate and municipal bond price information.  In January 2008, Mergent's pricing service became a part of Moody's Analytics Valuation Services.  In January 2008, Moody's Analytics, a division of Moody's Corp., had acquired Financial Projections Limited, a U.K.-based provider of credit-training services.  Financial Projections operates as part of Moody's Credit Training Services, which provides credit training and continuing education services, including seminars, e-learning and workbooks to customers worldwide.

Bad ratings

In July 2008, the firm announced that Noel Kirnon will be departing the firm following the launch of a companywide investigation.  Kirnon headed up the structured finance department, whose error regarding a ratings model was detected in May 2008 by the law firm Sullivan & Cromwell.  Moody's found that correcting the error would have significantly reduced the ratings of 11 debt products called CPDOs (constant-proportion debt obligations).  In addition to Kirnon's departure, Moody's said that other employees who work on CPDOs might be fired for not following company procedures regarding the debt product.

A dark second quarter

Moody's’ profit for the second quarter of 2009 decreased 20 percent to $187.2 million versus the same period a year earlier, while revenue declined 8 percent to $450.7 million.  Financially, things looked pretty grim across the board for the firm.  Moody's ratings unit's revenue decreased 35 percent, its global corporate finance group's revenue was up 9 percent, but its global structured finance revenue dropped off by 38 percent.  The firm has been deeply affected by the credit crunch, which has resulted in a smaller quantity of securities for the agency to rate and appraise.

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Moody's Corporation


7 World Trade Center
250 Greenwich Street
New York, NY 10007
Phone: (212) 553-0300
Fax: (212) 553-7194
www.moodys.com

STATS


  • Employer Type: Public
  • Stock Symbol: MCO
  • Stock Exchange: NYSE
  • Chairman, President & CEO: Raymond W. McDaniel Jr.
  • 2008 Employees: 3,000

Key Financials

  • 2008 Income: $537 million
  • 2008 Revenue: $1,205 million

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