[MCO – Moody’s] The Self-Reinforcing Standards Moat
scuttleblurb.substack.com
Moody’s is a Nationally Recognized Statistical Rating Organizations (NRSROs), a title bestowed by the SEC on a handful of credit rating agencies, the top 3 of whom act as an oligopoly in the US debt ratings gambit. As you well know, Moody’s (and S&P and Fitch) fell into disrepute during the last financial crisis when its ratings on vast swaths of corporate and securitized paper proved worthless, its grossly conflicted issuer-pay model laid plainly bare. But testament to the company’s resilient business model, and toothless fines and regulatory censures notwithstanding, Moody’s Investor Service (“MIS”, the credit rating agency side of the business that constitutes ~2/3 of revenue and ~85% of EBITDA) has thrived since the crisis, compounding revenue and EBITDA by 10% and 15%, respectively, since 2009 and generating more of each vs. the 2007 peak:
[MCO – Moody’s] The Self-Reinforcing Standards Moat
[MCO – Moody’s] The Self-Reinforcing…
[MCO – Moody’s] The Self-Reinforcing Standards Moat
Moody’s is a Nationally Recognized Statistical Rating Organizations (NRSROs), a title bestowed by the SEC on a handful of credit rating agencies, the top 3 of whom act as an oligopoly in the US debt ratings gambit. As you well know, Moody’s (and S&P and Fitch) fell into disrepute during the last financial crisis when its ratings on vast swaths of corporate and securitized paper proved worthless, its grossly conflicted issuer-pay model laid plainly bare. But testament to the company’s resilient business model, and toothless fines and regulatory censures notwithstanding, Moody’s Investor Service (“MIS”, the credit rating agency side of the business that constitutes ~2/3 of revenue and ~85% of EBITDA) has thrived since the crisis, compounding revenue and EBITDA by 10% and 15%, respectively, since 2009 and generating more of each vs. the 2007 peak: