Professional Documents
Culture Documents
1Q 2016
Disclaimer
Certain statements contained in this presentation are forward-looking statements and are based on future expectations, plans and
prospects for Moodys business and operations that involve a number of risks and uncertainties. Moodys outlook for 2016 and other
forward-looking statements in this presentation are made as of April 29, 2016, and the Company disclaims any duty to supplement,
update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or
otherwise. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company is
identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking
statements. Those factors, risks and uncertainties include, but are not limited to, the current world-wide credit market disruptions and
economic slowdown, which are affecting and could continue to affect the volume of debt and other securities issued in domestic and/or
global capital markets; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital
markets, including credit quality concerns, changes in interest rates and other volatility in the financial markets; the level of merger and
acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign
government initiatives to respond to the current world-wide credit market disruptions and economic slowdown; concerns in the
marketplace affecting Moodys credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency
ratings; the introduction of competing products or technologies by other companies; pricing pressure from competitors and/or
customers; the level of success of new product development and global expansion; the impact of regulation as an NRSRO, the potential
for new U.S., state and local legislation and regulations, including provisions in the Financial Reform Act and regulations resulting from
that Act; the potential for increased competition and regulation in the EU and other foreign jurisdictions; exposure to litigation related to
Moodys rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which
the Company may be subject from time to time; provisions in the Financial Reform Act legislation modifying the pleading standards, and
EU regulations modifying the liability standards, applicable to credit rating agencies in a manner adverse to credit rating agencies;
provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services; the possible loss of
key employees; failures or malfunctions of Moodys operations and infrastructure; any vulnerabilities to cyber threats or other
cybersecurity concerns; the outcome of any review by controlling tax authorities of the Companys global tax planning initiatives; the
outcome of those Legacy Tax Matters and legal contingencies that relate to the Company, its predecessors and their affiliated
companies for which Moodys has assumed portions of the financial responsibility; exposure to potential criminal sanctions or civil
remedies if the Company fails to comply with foreign and US laws and regulations that are applicable in the jurisdictions in which the
Company operates, including sanctions laws, anti-corruption laws and local laws prohibiting corrupt payments to government officials;
the impact of mergers, acquisitions or other business combinations and the ability of the Company to successfully integrate acquired
businesses; currency and foreign exchange volatility; the level of future cash flows; the levels of capital investments; a decline in the
demand for credit risk management tools by financial institutions; and other risk factors as discussed in the Companys annual report on
Form 10-K for the year ended December 31, 2015 and in other filings made by the Company from time to time with the Securities and
Exchange Commission.
May 10, 2016
Table of Contents
1. Financial Overview
2. Capital Markets Overview
3. Moodys Investors Service (MIS)
4. Moodys Analytics (MA)
5. Conclusion
6. Appendix
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Risk Understanding
Risk Understanding
Risk Understanding
Risk
Understanding
Risk
Measurement
Risk
Management
Methodologies
Training & Certification
Analyst Outreach
Ratings
Estimated Default Frequency
Analytics (EDFs)
Market-Implied Ratings
(MIRs)
Research
(from both MIS & MA)
Advisory Services
Stress Testing
Software
Moodys is an essential component of the global capital markets, providing credit ratings,
research, tools and analysis that contribute to open and integrated financial markets
Financial Overview
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
MA
Public,
Project &
Infrastructure
11%
Financial
Institutions
10%
Structured
Finance
13%
Corporate
Finance
31%
MIS Other
1%
Research,
Data &
Analytics
20%
Enterprise
Risk
Solutions
11%
Professional
Services
4%
Recurring
Non-US
AsiaPacific
10%
MCO
Americas
6%
Transaction
MIS
MA
26%
48%
60%
EMEA
25%
74%
52%
40%
United
States
58%
*All financial data is for the trailing twelve months ended March 31, 2016.
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
~2-4%
Disintermediation
of credit markets in both
developed and emerging
economies driving both
issuance and demand for
new products and
services
Growth in Moodys
Analytics driven by
further penetration
of MAs client base and
expansion of bank and
insurance risk regulatory
requirements
~2-3%
~2-3%
~3-4%
Long-Term Revenue Growth Opportunity: High Single-Digit to Low Double-Digit % (on average)
Potential Selective Acquisitions*
Potential Operating Income Margin Expansion
Ongoing Share Repurchases*
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Revenue
Low-singledigit
% growth
$ Billions
$4.0
$4.55
to
$4.65
$5.00
$4.50
$4.00
$3.0
$3.50
$2.0
$3.00
$4.21
$3.65
$2.50
$1.0
$2.00
$4.60
$2.46
$2.99
$1.50
$0.0
2011
2012
2013
2014
2015
2016F**
Operating Margin
2011
2012
2013
2014
2015
Moody's
45%
46.0%
44.7%
40%
42.4%
39.0%
43.3%
43.2%
41.5%
45.5%
42.3%
~45%
$1 of
Revenue
2012
Select Peers*****
S&P 500
2013
2014
2015
$0.30
$0.23
~41%
39.5%
35%
2011
2016F**
$0.10
2016F**
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Return of Capital
Acquisitions
Dividends
Invest in existing
businesses to support
organic growth
$1,370
$1,200
$1,090
$1,000
$197
215
$800
$600
205
$400
$455
$121
$200
$334
$0
2011
$1,221
$340
$143
$1,098
$893
$334
$72
$1.20
$1.00
$0.80
185
$0.60
175
$0.40
$262
$197
2012
195
$1.48
$1.40
225
$272
(Last 5 Years)
$1.60
235
$236
2013
2014
2015
1Q16
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
$ Millions
$1,400
Millions of Shares
$1,600
FY 2016 share
repurchase guidance:
~$1 billion***
Share Repurchases
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$4.60
$2.13
2010
Business performance
2015
19%
163%
144%
*2010 and 2015 represents non-GAAP EPS. See appendix for reconciliation from non-GAAP to GAAP. Contribution from share count reduction excludes interest expense from debt
issuance and foregone interest income, both of which are included in business performance.
**As of May 4, 2016. Source: FactSet.
10
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
20%
19%
23%
15%
16%
30%
40%
Crimean crisis
50%
MCO
Fears Euro debt crisis may
spread to Italy & Spain
MA
MIS
13%
12%
11%
10%
3%
5%
7%
6%
0%
5%
(6%)
2%
(2%)
-10%
1%
1%
(13%)
Q1'16
Q4'15
Q3'15
Q2'15
Q1'15
Q4'14
Q3'14
Q2'14
Q1'14
Q4'13
Q3'13
Q2'13
Q1'13
Q4'12
Q3'12
Q2'12
Q1'12
Q4'11
Q3'11
Q2'11
Q1'11
Q4'10
Q3'10
Q2'10
Q1'10
-20%
11
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Total
Corporate Finance
Moodys Analytics
(13%)
Total
11%
(20%)
Research, Data &
Analytics
Structured Finance
10%
(11%)
Enterprise Risk
Solutions
Financial Institutions
16%
1%
(9%)
Professional Services
0%
12
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Operating Expenses:
Operating Margin:
Approximately 41%
Approximately 45%
32% - 32.5%
$4.55 - $4.65
Share Repurchases:
Capital Expenditures:
Approximately $1 billion
*Amount is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure to its comparable US GAAP measure.
13
14
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Decline
since peak
800
6%
700
4%
2%
High Yield
900
(272) bps
600
500
(181) bps
1.8%
400
0%
0.3%
Feb-16
Mar-16
Apr-16
Bond Spreads
2,150
1,850
1,550
1,250
950
650
350
50
US Investment Grade
US High Yield
Euro Investment Grade
Euro High Yield
250
Investment Grade
Decline
since peak
225
200
175
(87) bps
150
125
(53) bps
100
Feb-16
Mar-16
Apr-16
Source: Moodys Analytics, Barclays. Bond Spreads are for non-financial corporates. All data is through April 29, 2016.
15
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
High Yield
Historical Average
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016F
Credit Metrics: North American & European Speculative Grade Companies Median Debt/EBITDA
EU
US
4.9x
4.8x
4.3x
5.0x
4.9x
5.0x
4.5x
4.8x
4.0x
4.0x
4.1x
2009
2010
2011
4.4x
4.5x
2012
2013
2014
4.5x
2015**
*Moodys global speculative grade default historical average of 4.2% since 1983.
**Data for North America covers trailing twelve month period at 3Q 2015; European data is 3Q 2015 only.
Source: Moodys Investors Service. All data is for Moodys rated corporate debt.
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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
High Yield
Investment Grade
$80
1.8%
Total
TTM 1Q16
4.1%
$ Billions
2014
$60
$40
$20
1.9%
$0
Commodities
1.7%
High Yield
$88
1.9%
$ Billions
$100
NonCommodities
$80
$40
$20
$53
$53
$60
$45
$55 $60
$63
$31
$19
$12
$0
2016
2017
2018
2019
2020
*Source: Moodys Investors Service. Commodities sector includes Oil & Gas and Metals & Mining.
**Source: Moodys Analytics. Commodities sector includes Oil & Gas and Metals & Mining.
***Source: FactSet. As of May 2016. Includes the following FactSet industry groups: Aluminum, Coal, Contract Drilling, Integrated Oil, Oil & Gas Pipelines, Oil & Gas Production, Oil
Refining/Marketing, Oilfield Services/Equipment, Other Metals/Minerals, Precious Metals, and Steel.
17
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
US Non-Financial Corporate
Bonds vs. Bank Loans Outstanding
Loans
Bonds
Loans
$8,000
7,000
6,000
$6,000
4,000
3,000
2,000
1,000
0
80%
4
8
%
$ Billions
Billions
5,000
47%
$4,000
4
8
53%
%
$2,000
20%
$0
European companies have historically relied more on banks than their American counterparts, but are
increasingly turning to the bond market
1Q 2016 Moodys rated European high yield bond and bank loan issuance was split approximately
50% / 50%, respectively
Sources: ECB, Federal Reserve, BarCap Indices. Europe bank loan data includes Eurozone and UK bank loans. Europe bond data includes euro and sterling denominated bonds.
Data is through February 2016.
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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
United States
Rest of World
1,200
# of new mandates
1,026
990
854
771
800
400
179
153
0
2012
2013
2014
2015
1Q15
1Q16
Lowered pace of new mandate activity in 1Q 2016 was due to wide and volatile high yield
credit spreads and reduced global issuance
*Rated by Moodys Investors Service.
Source: Moodys Investors Service.
19
20
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
A common language of
credit risk
For issuers, MIS ratings may provide tangible financing benefits, broaden access to
global capital markets, and help inform the formulation of internal capital plans and
funding strategies
For other market participants, MIS provides independent, globally comparable,
transparent and industry-leading analysis of credit risk
21
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Transaction
US
Non-US
36%
60%
Corporate
Finance
47%
MIS Other
1%
Public,
Project, &
Infrastructure
Finance
16%
Financial
Institutions
16%
64%
40%
Structured
Finance
20%
flat
US
low-single-digit % range
Non-US
low-single-digit % range
Corporate Finance
low-single-digit % range
Financial Institutions
mid-single-digit % range
Structured Finance
mid-single-digit % range
mid-single-digit % range
*All financial data for this section is for the trailing twelve months ended March 31, 2016.
22
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$264
$202
$185
$178
$144
$111
$19
$41
$9
2016
Source: MIS,
Feb-16.
Note: Data
represents US
& Canadian MIS
rated corporate
bonds & loans.
IG: 8%
$159
$104
$71
$43
$196
$176
SG: 71%
BL: 130%
2017
2018
2019
2020
$ Billions
$189
$167
$173
$147
IG: (4%)
$35
$58
$40
$35
$30
$40
$65
$50
Source: MIS,
Jul-15.
SG: 23%
BL: 19%
2016
2017
2018
2019
$ Billions
$122
$105
$97
2016
$18
$17
$14
2017
Investment Grade Bonds
2018
Speculative Grade Bonds
23
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
12%
M&A
Capital Spending
9%
Shareholder Payments
4%
11%
24%
22%
18%
17%
18%
7%
8%
8%
31%
30%
25%
% of mentions
63%
20%
7%
8%
17%
19%
45%
22%
31%
41%
53%
16%
15%
5%
9%
54%
59%
83%
71%
74%
78%
73%
1998
62%
52%
1999
2008
2009
2010
2011
2012
71%
2013
65%
2014
54%
2015
49%
1Q16
*% of mentions for each respective period in bond issue or bank loan program tranche documents. Excludes issues of less than $25 million and general corporate purposes.
An issue can have multiple purposes and, as a result, %s do not sum to 100%.
Source: Moodys Capital Markets Research Group (CMRG).
24
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Structured Finance
Financial Institutions
MIS Other
$1,000
$900
$800
$ Millions
$700
$600
$500
$400
$300
$200
$100
$0
As a % of MIS revenue
2011
2012
2013
2014
2015
TTM 1Q16
43%
38%
38%
39%
39%
40%
Drivers of MIS recurring revenue include growth in monitoring fees and select elements
of pricing
Recurring revenue averages ~40% of total MIS revenue
*MIS recurring revenue is typically billed annually and recognized ratably over 12 months. Recurring revenue can also be billed upfront and recognized over the life of the security.
25
Moodys Analytics
26
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
RD&A
Comml
Lending
Consumer
Lending
ERS
Other
Investment
Management
Investment
Banking
Sales &
Trading
Risk Mgmt
Credit market
analysis & data
Economic research,
data, & modeling
Structured finance
analytics
Prof.
Svcs.
Securities Markets
Software
Risk modeling
Training
Offshore analytical
resources
Treasury
27
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Transaction
US
Non-US
26%
53%
74%
47%
Enterprise
Risk
Solutions
33%
Professional
Services
13%
Operating Margin
high-single-digit % range
US
low-double-digit % range
Non-US
mid-single-digit % range
high-single-digit % range
2013
high-single-digit % range
2012
Professional Services
low-single-digit % range
19.9%
19.5%
2014
2011
18.1%
15.3%
17.5%
*All financial data for this section is for the trailing twelve months ended March 31, 2016.
28
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$1,200
BlackBox
Jan 2008:
Moodys
Analytics
established
WebEquity,
Lewtan
Professional Services
$149.9m, 42% CAGR
$1,000
Revenue $ millions
Amba
$800
$600
KMV*,
Economy.com,
Wall Street
Analytics
Canadian
Securities
Institute
Fermat
$400
$200
$0
2007
2008
2009
2010
2011
2012
2013
2014
2015
29
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$650
7.9
$600
$550
6.9
$500
6.4
$ Millions
Millions of jobs
7.4
$450
5.9
Q1'08
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
Q3'10
Q4'10
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
5.4
$400
$350
*Source: US Bureau of Labor Statistics and the UK Office for National Statistics. Available data through September 30, 2015.
30
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Growth drivers
Regulation and accounting
standards driving demand for
automated software tools
16% CAGR
$200
$150
13% CAGR
$100
$50
$0
31
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
32
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
33
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Year(s)
Insurance Risk
Year(s)
FinTech Forward
2014, 2015
2014, 2015
Year(s)
2013, 2014
Risk Management
2013
Pulsenomics
Year(s)
Crystal Ball
Year(s)
Year(s)
2016
2016
2013
Chartis
Year(s)
Pricing & Analytics Credit
2015
2015
2016
Stevie
Year(s)
2012/2013, 2015
2016
2012/2013, 2014
Year(s)
IDC
Year(s)
2015
2013
FinTech 100
2014, 2015
34
Conclusion
35
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
36
Appendix
37
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$350
Issuance $ Billions
$600
Revenue $ Millions
$300
$250
$200
$150
$100
$500
$400
$300
$200
$100
$50
$0
$0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q14
1Q16
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
Investment Grade
Speculative Grade
Bank Loans
$1,200
Revenue $ Millions
$1,000
$800
$600
$400
$1,500
$1,000
$500
$200
$0
$0
2007
Other**
2008
2009
2010
Investment Grade
2011
2012
2013
Speculative Grade
2014
2015
Bank Loans
2007
2008
2009
2010
2011
2012
2013
2014
2015
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Other includes: monitoring, CP, MTNs, and ICRA.
***Sources: Moodys Capital Markets Research Group, Dealogic; US Speculative-Grade Bank Loan Origination represents Moodys rated new US bank loan programs. Note: Debt
issuance categories do not directly correspond to Moodys revenue categorization.
38
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
100%
80%
80%
65%
66%
62%
62%
64%
60%
68%
70%
70%
68%
72%
40%
35%
34%
38%
38%
36%
32%
30%
30%
32%
26%
27%
30%
28%
27%
71%
74%
73%
70%
72%
73%
35%
35%
31%
37%
65%
65%
69%
63%
60%
40%
20%
29%
20%
28%
0%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US
US
Transaction
Recurring
18%
18%
23%
15%
21%
21%
22%
23%
20%
23%
19%
21%
29%
26%
36%
36%
38%
35%
34%
80%
21%
19%
60%
21%
40%
20%
42%
19%
18%
18%
17%
13%
11%
16%
13%
25%
29%
43%
42%
27%
39%
28%
43%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Other**
Investment Grade
Speculative Grade
Bank Loans
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Other includes: monitoring, CP, MTNs, and ICRA.
Percentages have been rounded and may not total to 100%.
39
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$100
Issuance $ Billions
Revenue $ Millions
$120
$80
$60
$40
$20
$300
$250
$200
$150
$100
$50
$0
$0
1Q14
2Q14
ABS
3Q14
RMBS
4Q14
CREF
1Q15
2Q15
3Q15
Structured Credit
4Q15
1Q16
1Q14
Other
ABS
$1,000
Issuance $ Billions
$800
$600
$400
$200
3Q14
4Q14
RMBS
1Q15
CREF
2Q15
3Q15
4Q15
1Q16
Structured Credit
$3,000
Revenue $ Millions
2Q14
$2,500
$2,000
$1,500
$1,000
$500
$0
$0
2007
2008
2009
ABS
RMBS
2010
CREF
2011
2012
2013
2014
Structured Credit
Other
2015
2007
2008
ABS
2009
RMBS
2010
2011
CREF
2012
2013
2014
2015
Structured Credit
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: AB Alert, CM Alert, Moodys Corporation. Debt issuance categories do not directly correspond to Moodys revenue categorization.
Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization) includes
covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance, and commercial real estate CDOs. Structured Credit
includes CLOs and CDOs.
40
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
100%
80%
47%
80%
54%
64%
66%
60%
70%
70%
72%
66%
66%
69%
40%
38%
39%
38%
33%
36%
58%
60%
62%
61%
66%
62%
67%
52%
64%
45%
60%
40%
40%
20%
42%
34%
48%
53%
46%
36%
34%
30%
30%
28%
34%
20%
34%
31%
55%
0%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - U.S.
U.S.
Transaction
Recurring
0%
0%
0%
23%
24%
25%
80%
20%
60%
40%
20%
26%
31%
25%
22%
29%
0%
0%
0%
0%
0%
0%
32%
28%
34%
32%
26%
31%
28%
33%
27%
33%
18%
18%
18%
22%
21%
21%
30%
19%
26%
17%
18%
33%
0%
24%
31%
31%
20%
18%
21%
20%
23%
22%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
ABS
RMBS
CREF
Structured Credit
Other
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.
Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization) includes
covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance and commercial real estate CDOs. Structured Credit includes
CLOs and CDOs.
41
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$500
Issuance $ Billions
$100
Revenue $ Millions
$80
$60
$40
$400
$300
$200
$100
$20
$0
$0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q14
1Q16
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
Insurance
Managed Investments
Other
$400
$2,000
Issuance $ Billions
$350
Revenue $ Millions
$300
$250
$200
$150
$100
$1,600
$1,200
$800
$400
$50
$0
$0
2007
2008
Banking
2009
2010
Insurance
2011
2012
2013
Managed Investments
2014
Other
2015
2007
2008
2009
2010
2011
2012
2013
2014
2015
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: Moodys Capital Markets Research Group, Dealogic. Note: Debt issuance categories do not directly correspond to Moodys revenue categorization.
42
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
100%
80%
40%
41%
42%
40%
44%
42%
45%
39%
43%
80%
42%
66%
63%
65%
65%
60%
64%
65%
62%
63%
61%
34%
37%
35%
35%
40%
36%
35%
38%
37%
39%
60%
60%
40%
40%
60%
59%
58%
60%
56%
58%
55%
61%
57%
58%
20%
20%
0%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US
US
Transaction
Recurring
0%
6%
0%
6%
0%
5%
1%
5%
2%
4%
3%
5%
2%
4%
3%
5%
3%
4%
3%
4%
80%
25%
24%
26%
26%
27%
23%
29%
26%
26%
31%
69%
70%
69%
68%
67%
69%
65%
66%
67%
62%
60%
40%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Banking
Insurance
Managed Investments
Other
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.
43
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$120
$120
Issuance $ Billions
Revenue $ Millions
$100
$80
$60
$40
$20
$80
$60
$40
$20
$0
-$20
$100
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
$0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
$400
Issuance $ Billions
$350
Revenue $ Millions
$500
$300
$250
$200
$150
$400
$300
$200
$100
$100
$50
$0
$0
2007
2008
2009
2010
2011
2012
2013
Public Finance and Sovereign
Project & Infrastructure Finance
Other
2014
2015
2007
2008
2009
2010
2011
2012
2013
2014
2015
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: Thomson SDC, Moodys Corporation. Note: Debt issuance categories do not directly correspond to Moodys revenue categorization.
44
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
100%
80%
80%
64%
65%
63%
63%
65%
60%
68%
64%
63%
65%
67%
39%
40%
42%
36%
38%
44%
44%
40%
41%
58%
61%
60%
58%
64%
62%
56%
56%
60%
59%
60%
40%
40%
20%
42%
36%
35%
37%
37%
35%
32%
36%
37%
35%
20%
33%
0%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US
US
Transaction
Recurring
0%
0%
0%
0%
80%
44%
44%
49%
51%
56%
56%
51%
49%
0%
0%
0%
0%
0%
0%
44%
46%
49%
46%
46%
40%
56%
54%
51%
54%
54%
60%
60%
40%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Public Finance and Sovereign
Other
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.
45
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
$350
$1,200
Professional Services
Enterprise Risk Solutions
Research, Data and
Analytics
$250
$200
$150
$100
$50
$1,000
Revenue $ Millions
Revenue $ Millions
$300
$800
$600
$400
$200
$0
$0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
9%
80%
28%
13%
13%
16%
14%
14%
13%
12%
13%
13%
29%
29%
31%
29%
30%
32%
38%
33%
31%
58%
58%
54%
57%
56%
55%
50%
54%
57%
60%
40%
63%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
100%
80%
100%
42%
43%
45%
44%
49%
48%
45%
44%
46%
49%
60%
20%
80%
60%
40%
58%
57%
55%
56%
51%
52%
55%
56%
54%
51%
80%
77%
77%
73%
77%
76%
75%
70%
74%
76%
20%
23%
23%
27%
23%
24%
25%
30%
26%
24%
40%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non-US
US
*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Transaction
Recurring
46
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
MA Revenue
MCO Revenue
$4,000
+120bps
7.8%
$3,500
7%
$3,000
$ Millions
8%
6.5%
6%
$2,500
5.8%
+100bps
$2,000
+200bps
5%
4.7%
4%
$1,500
+180bps
3.3%
3.0%
3%
2.2%
$1,000
2%
2.3%
1.8%
$500
1%
$0
0%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
*10-yr Treasury Yields are represented by the rate at the end-of-period. Source: www.treasury.gov
47
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
2011
2012
2013
2014
2015
2011-2015
CAGR
1Q16
Issuance
2%
11%
1%
5%
-5%
3%
-12%
Revenue
12%
20%
9%
9%
3%
10%
-13%
Issuance $ Trillions
$1.9
$4.0
$2.1
$2.3
$2.3
$2.5
$1.6
$2.0
$3.0
Revenue $ Billions
$5.0
$1.5
$2.0
$1.0
$0.6
$0.5
$1.0
$0.5
$0.0
$0.0
2011
2012
2013
2014
2015
1Q15
1Q16
In addition to issuance activity levels, MIS revenue is impacted by (i) the mix of issuance activity, (ii) pricing
and (iii) growth in monitored credits
*Rated global investment grade bonds, global high yield bonds, US high yield bank loans, global structured finance, and US municipal issuance.
Source: Moodys Capital Markets Research Group, Dealogic, AB Alert, CM Alert, Thomson SDC. US High Yield Bank Loans represent Moodys rated new US bank loan programs.
48
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Concentration &
Large Exposures
Restrictions use
internal models for
CR RWA
Concentration
Large Exposures
NSFR
TLAC2
Revised SA
approach CR
Revised SA
operational risk
IFRS 9
Leverage
Ratio
IRRBB review
New securitization
framework
CVA review
FRTB
Revised SA
approach CR
BoE/PRA ST
CVA review
FRTB
Restrictions use
internal models for
CR RWA
Leverage
Ratio
BoE/PRA ST
TLAC2
IRRBB review
Restrictions use internal
models for CR RWA
NSFR
IFRS 9
Vickers reform
New securitization
framework
LCR1
ECB Anacredit
Enhanced P3
disclosures
CVA review
CCAR /
Reg cap CCP
DFAST
TLAC2
3
SA-CCR
exposures
Enhanced P3
LCR1
disclosures Leverage
BoE/PRA ST
SA-CCR3
CCAR /
Ratio
EBA Liquidity
DFAST
G-SIB
Revised SA
Enhanced P3
monitoring
NSFR
Reg
cap
CCP
2
Surcharge
approach CR
disclosures
Financial
exposures
CECL
D-SIB
conglomerates
FSB Data
3
BCBS
239
SA-CCR
framework4
CCAR /
Initiative5
ST
IFRS 9
BoE/PRA ST
Reporting fin.
DFAST
SEC
Liquidity
rules
FSB Data
conglomerates
Supplementary
Capital rules to
EU-wide ST
5
(ETF,
mutual
funds)
Initiative
CA res. mortgage
leverage ratio
large foreign banks
SSFA
for
CCAR /DFA ST
PRA CAD/Pillar 2
IRRBB
BCBS
Concentration
Reg cap CCP
securitizations
1
LCR
review
FBO ST
239
Large Exposures
exposures
LCR1
BCBS 239
FDSF
G-SIB
FSB Data
Revised SA
New
securitization
1
LCR,
G-SIB
LCR
2
Surcharge
Initiative5
operational risk
framework
NSFR
Surcharge2
49
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
Private Placement
2007: $300m 10yr note
$4,000
$3,500
2.5x
2.0x
$ in millions
$3,000
$2,500
1.5x
$2,000
1.0x
$1,500
$1,000
0.5x
$500
$0
0.0x
2005
2006
2007
2008
EBITDA** (L)
2009
2010
2011
2012
2013
2014
2015 TTM*
1Q16
Gross Debt/EBITDA (R)
50
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
2015
2016
3,441
7,311
10,752
US employees
non-US employees
total employees*
3,202
6,768
9,970
US employees
non-US employees
total employees**
51
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
2011
2012
2013
2014
2015
$888.4
$1,077.4
$1,234.6
$1,439.1
$1,473.4
39.0%
39.5%
41.5%
43.2%
42.3%
79.2
93.5
93.4
95.6
113.5
Restructuring
12.2
$967.6
$1,183.1
$1,328.0
$1,534.7
$1,586.9
42.4%
43.3%
44.7%
46.0%
45.5%
2016F*
Approximately $1.1 billion
52
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
2010
$2.15
2011
$2.49
2012
$3.05
2013
$3.60
2014
$4.61
2015
$4.63
2016F*
$4.55 - $4.65
Legacy Tax
(0.02)
(0.03)
(0.06)
(0.09)
(0.03)
(0.03)
0.14
(0.37)
$2.13
$2.46
$2.99
$3.65
$4.21
$4.60
$4.55 - $4.65
53
Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix
2006
2007
2008
2009
2010
2011
2012
2013
2014
$753.9
$701.5
$457.6
$402.0
$507.8
$571.4
$690.0
$804.5
$988.7
$506.6 $415.0
($3.0)
$24.3
$39.5
$42.9
$1,297.0 $1,183.7
$268.2
$52.2
$75.1
$853.1
$239.1
$33.4
$64.1
$738.6
$201.0
$52.5
$66.3
$827.6
2015
$941.3
54
Website: http://ir.moodys.com
Email:
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55
2016 Moodys Corporation, Moodys Investors Service, Inc., Moodys Analytics, Inc. and/or their licensors
and affiliates (collectively, MOODYS). All rights reserved.
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Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings
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56