Sep 5, 2025 1:52 PM Eastern Daylight Time KBRA Assigns Preliminary Ratings to Upstart Securitization Trust 2025-3 Share NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to four classes of notes issued by Upstart Securitization Trust 2025-3 ("UPST 2025-3†), a $320 million consumer loan ABS collateralized by unsecured consumer loans. The preliminary ratings reflect initial credit enhancement levels of 56.45% for the Class A notes, 43.50% for the Class B notes, 33.30% for the Class C notes and 20. ...

Core Insights - Moody's Corp. plans to acquire a majority equity stake in Middle East Rating & Investors Service (MERIS), a domestic credit rating agency in Egypt, with deal terms undisclosed [1][3][7] Company Overview - MERIS, established in 2003, is a joint venture between Moody's and Egyptian consultancy FinBi, providing national-scale credit ratings across various sectors including financial institutions and structured finance [2][7] Strategic Rationale - The acquisition strengthens the partnership between Moody's and MERIS, enhancing Moody's presence in the Middle East and Africa, and supporting local capital market growth [3][4] - The deal is pending regulatory approvals, and MERIS will maintain its independence, including its own rating methodologies and management team [3][7] Management Commentary - Monica Merli, COO of Moody's Ratings, expressed enthusiasm about the strengthened relationship with MERIS, highlighting its importance in Egypt's domestic credit rating landscape [4] Recent Performance - Moody's shares have increased by 3.5% over the past six months, compared to a 10.6% growth in the industry [5]

Core Viewpoint - The downgrade of U.S. Treasury bonds by Moody's has led to a significant decline in global confidence, prompting countries like China and Hong Kong to reduce their holdings, which could signal a shift away from U.S. dollar assets and a potential end to dollar hegemony [1][3][12]. Group 1: Impact of Moody's Downgrade - Moody's downgrade of U.S. Treasury bonds has resulted in global financial institutions reassessing the safety of these assets, with Hong Kong's Mandatory Provident Fund being forced to sell off U.S. Treasuries due to the loss of AAA rating [3][5]. - As of May 2025, China's holdings of U.S. Treasuries have plummeted by 42% from their peak in 2013, now standing at $765.4 billion [5][7]. - The market reaction has been severe, with the 30-year Treasury yield surpassing 5%, the highest since 2007, and the U.S. dollar index dropping to around 100 [7][11]. Group 2: China's Strategy and Global Reactions - China's reduction in U.S. Treasury holdings is a strategic move to mitigate risks associated with U.S. financial policies and geopolitical tensions [7][11]. - The shift away from U.S. Treasuries is part of a broader trend where countries are increasingly turning to gold and other currencies, as evidenced by China's record gold purchases and the rise of the renminbi in cross-border transactions [11][12]. - The potential for a financial crisis is heightened as rising Treasury yields increase global borrowing costs, leading to economic distress in developing countries and impacting global financial stability [11][14]. Group 3: Political and Economic Implications - The political polarization in the U.S. has been identified as a key factor undermining trust in U.S. debt, with both major parties failing to implement fiscal tightening measures [9]. - Former President Trump's response to the downgrade has included blaming the current administration and calling for interest rate cuts to alleviate debt burdens, reflecting a lack of accountability for the rising national debt [9][14]. - The ongoing crisis may lead to a significant transformation in global finance, with predictions that 2025 could be one of the most tumultuous years since the collapse of the Bretton Woods system [14].

Supplemental Information/Conference Call/Webcast Details: The Company's senior management will review the second quarter 2025 earnings results on a conference call scheduled for today, July 31, at 8:30 a.m. EDT. Additional information presented on the conference call, as well as the Company's Supplemental slide content may be found on the Company's Investor Relations Website at http://investor.spglobal.com/Quarterly- Earnings. We are widely sought after by many of the world's leading organizations to provid ...

Core Viewpoint - Moody's Corporation (NYSE: MCO) is viewed positively due to its pricing power and potential for upside if the macro environment improves [1] Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Key factors considered include competitive moat, unit economics, reinvestment opportunities, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1] - The focus is on sectors with strong secular tailwinds, indicating a preference for industries poised for growth [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for writing is to share investment insights and receive feedback from the investment community [1] - The aim is to help readers concentrate on the elements that drive long-term equity value [1]

Core Insights - Moody's reported second-quarter 2025 adjusted earnings of $3.56 per share, exceeding the Zacks Consensus Estimate of $3.44, with an 8.5% year-over-year growth [1][7] - The company's revenues improved to $1.90 billion, surpassing the Zacks Consensus Estimate of $1.85 billion, reflecting a 4.5% increase year-over-year [3][7] - Operating expenses rose to $1.08 billion, up 3.6% year-over-year, impacting overall profitability [3][7] Financial Performance - Net income attributable to Moody's was $578 million or $3.21 per share, an increase from $552 million or $3.02 per share in the prior-year quarter [2] - Adjusted operating income reached $966 million, a 7.1% increase year-over-year, with an adjusted operating margin of 50.9%, up from 49.6% a year ago [3] Segment Performance - Moody's Investors Service (MIS) revenues slightly declined to $1.06 billion due to weakness in Corporate Finance and Financial Institutions, partially offset by growth in Structured Finance [4] - Moody's Analytics (MA) revenues increased by 10.5% year-over-year to $891 million, driven by strong demand for proprietary data and analytical insights [4] Balance Sheet and Liquidity - As of June 30, 2025, Moody's had total cash, cash equivalents, and short-term investments of $2.29 billion, down from $2.97 billion as of December 31, 2024 [5] - The company reported $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under its revolving credit facility [5] Share Repurchase Activity - In the quarter, Moody's repurchased 0.6 million shares at an average price of $460.76, with $0.9 billion of share repurchase authorization remaining [6] Guidance and Outlook - Moody's updated its 2025 guidance, expecting adjusted earnings of $13.50-$14.00 per share, revised from the previous target of $13.25-$14.00 [7][8] - The MIS segment's revenue growth is now expected to be in the low to mid-single-digit range, adjusted from stable to mid-single-digit growth [8] Strategic Developments - In June, Moody's fully acquired ICR Chile, enhancing its presence in Latin America's domestic credit markets, although the transaction is not expected to materially impact 2025 financial results [9][10]

Financial Data and Key Metrics Changes - Moody's reported second quarter revenue of $1.9 billion, representing a 4% year-over-year growth, despite a tough comparison to the previous year's 22% growth [6][7] - Adjusted operating margin improved to 50.9%, up 130 basis points from a year ago, translating to adjusted diluted EPS of $3.56, a 9% increase [7][8] - The company narrowed its guidance ranges for rated issuance, MIS revenue, and EPS based on second quarter performance [8] Business Line Data and Key Metrics Changes - MIS revenue was flat year-over-year at $1 billion, with a favorable issuance mix contributing to transaction revenue growth despite a 12% decline in overall issuance [26][27] - Moody's Analytics (MA) revenue grew 11%, with recurring revenue increasing by 12%, driven by strong demand in Decision Solutions [31][32] - Private credit-related transactions accounted for nearly 25% of first-time mandates, with revenue related to private credit growing 75% year-over-year [12][84] Market Data and Key Metrics Changes - The U.S. public finance group rated the highest quarterly issuance volume since 2007, with first-time mandates nearly reaching 200 in the second quarter [29] - In EMEA, first-time mandates increased year-over-year, driven by private credit mandates [30] - The private credit market continues to grow, with significant demand for ratings as investors seek transparency and comparability [95][96] Company Strategy and Development Direction - Moody's is focused on strengthening its position in private credit markets and enhancing its analytics capabilities through strategic partnerships, such as with MSCI [13][20] - The company is investing in digital transformation and AI adoption to capitalize on multi-year investment cycles for customers [42] - Moody's aims to leverage its data integration with major technology players to enhance customer access and monetization opportunities [21][20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, highlighting key credit themes that could influence performance [10] - The company is monitoring macroeconomic and geopolitical uncertainties that may impact issuance volumes [39] - Management emphasized the importance of maintaining a disciplined expense management approach to support margin expansion [66] Other Important Information - Moody's Analytics achieved a 96% recurring revenue rate, reinforcing the predictability of its business model [14] - The company completed the acquisition of ICR Chile, enhancing its presence in the Latin American bond market [19] - Moody's received recognition for its innovative solutions, being ranked number one in quantitative analytics for the third consecutive year [15] Q&A Session Summary Question: Insights on Decision Solutions and KYC - Management acknowledged strategic terminations and government-related attrition affecting KYC and insurance, but noted strong growth in banking lending products [46][48] Question: Potential Pull Forward of Issuance - Management indicated no significant pull forward of issuance occurred, with both public and private credit markets performing well [57][58] Question: Operating Margin Expansion - Management clarified that the margin expansion was due to operational efficiencies and not due to expense shifts from Q2 to later quarters [64][66] Question: Banking Sector Performance - Management noted that while banking ARR has seen declines, lending products are showing strong growth, particularly with the integration of Numerated [70][71] Question: AI and GenAI Contributions - Management highlighted that while standalone AI revenue is not material, early adopters of GenAI are showing double the growth compared to other customers [78][80] Question: Private Credit Contributions - Management confirmed that private credit is contributing to various revenue streams, particularly in structured finance and first-time mandates [84][83]

Financial Performance Highlights - Moody's achieved its second-highest Q2 revenue on record[9] - Moody's Analytics (MA) Annualized Recurring Revenue (ARR) reached $33 billion, an increase of 8% year-over-year[9] - Adjusted Operating Margin increased by 130 basis points to 509%[12] - Adjusted Diluted EPS increased by 9% to $356[12] Moody's Investors Service (MIS) Performance - MIS revenue outpaced issuance by approximately 12%[13] - MIS achieved an Adjusted Operating Margin of 642%, up 100 basis points[12, 16] - Total MIS rated issuance guidance was updated to reflect a decrease in the low-single-digit to mid-single-digit percent range[27, 36] Moody's Analytics (MA) Performance - MA experienced strong recurring revenue growth, with recurring revenue accounting for 96% of total revenue[19] - MA's Adjusted Operating Margin increased by 360 basis points to 321%[12, 19] - Decision Solutions led with 10% ARR growth[12] - MA revenue grew by 11% year-over-year[19] Updated Full Year 2025 Guidance - MCO revenue growth is projected to be in the mid-single-digit percent range[10] - Adjusted Diluted EPS is now expected to be in the range of $1350 to $1400[12] - The company plans to repurchase at least $13 billion in shares[39]

Core Viewpoint - Analysts forecast Moody's (MCO) will report quarterly earnings of $3.42 per share, reflecting a year-over-year increase of 4.3%, with anticipated revenues of $1.85 billion, up 1.8% from the previous year [1]. Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised upward by 1.5%, indicating analysts' reassessment of their initial forecasts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts estimate that 'Revenue- Total external customers- Moody's investor services' will reach $977.85 million, down 3.7% year-over-year, while 'Revenue- Total external customers- Moody's Analytics' is projected at $871.28 million, up 8.6% [5]. - 'Revenue- Moody's Analytics- Decision Solutions' is expected to be $409.35 million, reflecting an 11.8% increase year-over-year. 'Revenue- Moody's Analytics- Data and Information' is estimated at $222.57 million, up 6%, and 'Revenue- Moody's Analytics- Research and Insights' at $239.93 million, up 6.2% [6]. - The consensus for 'Revenue- Moody's investor services' is $1.03 billion, indicating a 3.1% decrease from the prior year, while 'Revenue- Moody's Analytics' is projected at $875.94 million, up 8.7% [8]. - Specific revenue estimates include 'Revenue- Moody's investor services- Recurring' at $336.58 million, up 4.2%, and 'Revenue- Moody's investor services- Transaction' at $640.27 million, down 7.5% [7][8]. - 'Revenue- Moody's investor services- Public, project and infrastructure finance' is expected to reach $164.17 million, up 6.6%, and 'Revenue- Moody's investor services- Financial institutions' at $197.98 million, up 1.5% [9]. Stock Performance - Over the past month, Moody's shares have returned +6.8%, outperforming the Zacks S&P 500 composite's +5.4% change, suggesting that MCO will likely perform in line with the overall market in the upcoming period [9].

Summary of S&P Global Q1 2025 Earnings Call Company Overview - **Company**: S&P Global - **Industry**: Financial Services and Market Intelligence Key Financial Highlights - **Total Revenue**: Increased by 8% year-over-year, with subscription products growing by 7% [2] - **Adjusted Diluted EPS**: Grew by 9% [2] - **Margin Expansion**: Achieved 240 basis points year-over-year, with trailing 12-month margins at a record 49.3% [8] - **Capital Allocation**: Returned over $900 million to shareholders through dividends and repurchases in Q1 [2] Strategic Developments - **Divestiture**: Signed an agreement to divest the Ostra joint venture to KKR, expected to close in the second half of 2025 [2] - **Separation of Mobility Division**: Announced intent to spin off the mobility division into a standalone public company, expected to be tax-free and completed within 12 to 18 months [2][9] Market Insights - **Bills Issuance**: Increased by 9% year-over-year in Q1, driven by structured finance and bank loans [3] - **Market Volatility**: Anticipated to suppress issuance volumes, particularly in high-yield markets, with expectations of a double-digit decline in Q2 [6] - **Macroeconomic Conditions**: Noted unpredictable market movements, geopolitical risks, and regulatory fluidity impacting customer behavior and decision-making [3] Business Segment Performance - **Market Intelligence**: Revenue increased by 5%, with strong demand for data analytics and insights products [12] - **Ratings Division**: Revenue grew by 8%, with transaction revenue up by 7% due to heightened refinancing activity [13] - **Commodity Insights**: Revenue increased by 9%, benefiting from strong demand during periods of volatility [14] - **Mobility Division**: Revenue grew by 9%, with dealer revenue up by 11% driven by products like Carfax [15] - **S&P Dow Jones Indices**: Revenue increased by 15%, primarily due to growth in asset-linked fees [16] Customer Engagement and Market Trends - **Increased Engagement**: Noted a significant uptick in platform usage across various divisions, indicating strong customer engagement [3][27] - **Subscription Resilience**: Approximately 75% of total revenue is recurring, providing stability during market fluctuations [5] - **Vendor Consolidation**: Customers are increasingly consolidating vendors, which S&P Global aims to capitalize on [27] Guidance and Outlook - **Revenue Growth Expectations**: Total revenue growth projected in the range of 4% to 6% for 2025, with adjusted margins between 48.5% and 49.5% [16] - **Billed Issuance**: Expected to be flat year-over-year, with potential for opportunistic issuance in the second half of 2025 [22] - **Focus on Innovation**: Continued commitment to innovation in data, benchmarks, and AI to enhance customer value [7] Additional Considerations - **Long-term Growth Confidence**: Despite near-term headwinds, management remains optimistic about long-term growth, particularly in the mobility sector due to trends in EV transition and used car markets [10] - **Cost Management**: Emphasis on managing expenses and maintaining margins amidst market volatility [21] This summary encapsulates the key points from the S&P Global Q1 2025 earnings call, highlighting financial performance, strategic initiatives, market insights, and future outlook.