Moody's

Thesis

• The verdict: The self-reinforcing standard moat.
• Cyclicality: New issuance is macro-driven (AI-related rated issuance, rate and spread shock).
• Business: Moody's Ratings (MIS) and Moody's Analytics (MA).
  • MA is more stable but lower quality and lower margin.
• Drivers: rated issuance volume (GDP growth + disintermediation + AI financing) + price increase.
• Risks:
  • A rate and spread shock that closes the primary market, e.g. a private credit default cycle.
  • Rating litigation risks.
  • Private credit disintermediates the fee.
  • Generative AI attacks Moody's research service? Hard to break into its moat.
• Questions:
  • Private credit growth?

Reports

• MCO Business Overview

Reference

• MCO – Moody’s The Self-Reinforcing Standards Moat