Moody's

Moody's
Name	Moody's Corporation
Type	Public
Industry	Financial services
Founded	1909
Founder	John Moody
Headquarters	New York City, New York, United States
Key people	Ray McDaniel (former), Rob Fauber (CEO)
Products	Credit ratings, research, risk analysis, software
Revenue	US$ (varies yearly)
Num employees	(varies yearly)

Moody's

Moody's is a global provider of financial information, credit ratings, research, and risk analysis, headquartered in New York City. The firm issues assessments of creditworthiness for issuers and securities in markets including United States, European Union, and Japan. Its services inform investors, issuers, and regulators across capital markets such as bond market, structured finance, and sovereign debt.

History

Founded by John Moody in 1909, the company emerged amid expansion of the U.S. railroad industry and the rise of institutional investors such as J.P. Morgan and John D. Rockefeller. During the 20th century it expanded coverage to industrial firms, municipal issuers, and international borrowers, interacting with regulatory developments like the Securities Exchange Act of 1934 and postwar financial integration tied to institutions such as the International Monetary Fund and World Bank. In the late 20th and early 21st centuries the firm diversified into structured finance ratings and research during a period of innovation in mortgage-backed securities and collateralized debt obligations. Corporate actions, including a 2000s reorganization into separate entities and an initial public offering, paralleled consolidation in the financial services sector involving actors like Standard & Poor's and Fitch Ratings.

Corporate structure and operations

The corporation operates through distinct business units focused on ratings and analytics, maintaining legal, compliance, and risk functions to interact with regulators such as the U.S. Securities and Exchange Commission and the European Securities and Markets Authority. Governance structures include a board of directors with representation linked to institutional investors such as BlackRock and Vanguard Group. Global operations span offices in financial centers including London, Hong Kong, Frankfurt, and Singapore, and rely on internal research teams that engage with issuers including Treasury of the United Kingdom and corporate borrowers like General Electric and Toyota. The company sells subscription products and fee-based services to asset managers such as PIMCO and Vanguard, insurers like AIG, and banking institutions including Bank of America and HSBC.

Credit rating methodology

Rating methodologies combine quantitative and qualitative analysis drawing on market data from exchanges such as New York Stock Exchange and NASDAQ, macroeconomic indicators from agencies like the Federal Reserve and European Central Bank, and sectoral benchmarks from organizations such as the International Monetary Fund. Methodological frameworks evaluate issuer creditworthiness across dimensions including liquidity, leverage, management quality, and legal structure, with analytical staff referencing precedents from sovereign cases like Argentina sovereign debt restructuring and corporate defaults such as Lehman Brothers collapse. Ratings committees and surveillance processes are designed to address conflict-of-interest concerns highlighted by regulators including the U.S. Department of Justice and standards bodies like the International Organization of Securities Commissions.

Market role and products

The firm provides long-term and short-term issuer ratings, surveillance reports, research notes, scenario analysis, and risk management software used by participants in primary and secondary markets such as Goldman Sachs, Morgan Stanley, and Citigroup. Products cover asset classes including municipal bonds, corporate bonds, asset-backed securities, and sovereign debt, and support portfolio managers at institutions like State Street and BlackRock in benchmarking and risk allocation. The company's ratings are embedded in regulatory frameworks and market practices influenced by policymakers in jurisdictions such as the European Commission and U.S. Congress, and are utilized by credit default swap dealers and index providers including Markit.

Controversies and litigation

The firm has faced criticism and legal actions related to its role in the buildup to the 2007–2008 financial crisis, particularly concerning ratings of subprime mortgage-related securities and collateralized debt obligations. Litigation has involved plaintiffs including institutional investors, government plaintiffs such as state attorneys general, and settlement discussions with agencies like the U.S. Department of Justice. Debates over issuer-pays versus subscriber-pays business models, potential conflicts of interest, and regulatory oversight have engaged entities such as Congressional committees, the Financial Stability Board, and advocacy groups. The company has also been subject to enforcement actions and fines by regulators including the U.S. Securities and Exchange Commission and the Office of Fair Trading in the United Kingdom.

Financial performance and metrics

Financial metrics used to evaluate the company include revenue, operating income, net income, and adjusted EBITDA reported in filings to the U.S. Securities and Exchange Commission via forms such as the 10-K and 10-Q. Key performance indicators tracked by investors include ratings migration metrics, market share versus competitors like S&P Global and Fitch Group, subscription renewal rates, and geographic revenue diversification across regions including Asia-Pacific, Europe, and the Americas. Credit market volumes, issuance activity in sectors like municipal finance and structured finance, and macroeconomic indicators from institutions such as the International Monetary Fund influence periodic earnings and stock performance observed on exchanges like the New York Stock Exchange.

Category:Credit rating agencies Category:Financial services companies of the United States