Moody's

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Moody's Corporation

logo
legal form Corporation
ISIN US6153691059
founding 1909
Seat New York , United StatesUnited StatesUnited States 
management Raymond W. McDaniel Jr. ( Chairman and CEO )
Number of employees 11,000
sales 4.8 billion US dollars
Branch Rating agency
Website www.moodys.com
As of December 31, 2019

Moody's Corporation is the parent company for Moody's Investors Service and Moody's Analytics . The US company is listed on the New York Stock Exchange (symbol MCO). Moody's Analytics is a risk management software provider . Moody's Investors Service is an American US by the Financial SEC since 1975 recognized rating agency ( English Nationally Recognized Statistical Rating Organization , NRSRO).

Sales in billion $ (2019)

history

The agency was founded in 1909 by John Moody. At that time, the agency delivered ratings for railway bonds to investors for a fee. Moody's Investors Service was founded in 1914 . Since 1970 Moody's has no longer charged fees from investors, but from issuers. In 1975 Moody's was added to the list of the Nationally Recognized Statistical Rating Organization (NRSRO) by the SEC .

By March 2009, had Warren Buffett company Berkshire Hathaway 48,000,000 shares of Moody's, after which it decreased its stake to 28 million. Buffets stake in the company is now 13 percent, making him the largest shareholder and the only one with a stake of over 5 percent.

In its 2010 annual report, Moody's announced that the US Securities and Exchange Commission had formally notified the company ( Wells Notice ) in March 2010 that its 2007 application to remain an NRSRO may be re-examined.

Market position

Moody's rates commercial enterprises and banks based on their published figures and rates their management. The company also rates government bonds . Moody's is the second largest rating agency and controls 40 percent of this market. The three rating agencies S&P , Moody's and Fitch Ratings dominate 95 percent of the world market. The return on sales by Moody's in 2011 was over 40 percent.

In 2009, S&P and Moody's said they jointly rated over a million loans; around 1,000 analysts were involved in this at each agency. The agencies charge the issuer of the bond 3 to 4 basis points for each rating, depending on the issue volume. In addition to the pricing of individual issues, there is another pricing model for large companies and banks that often take out loans in a kind of “flat rate”. Income seems small, but it is the bulk of the orders that generates the high profits. The result is also promoted by the low personnel costs.

Moody's was instrumental in assessing the creditworthiness of securitized mortgage loans in the United States, generating 44 percent of its sales. This type of mortgage was one of the main causes of the financial crisis in 2008. Rudolf Hickel described the three rating agencies as a “private license to chip in money”. Moody's announced on January 13, 2017 that it would pay $ 864 million in fines as part of a settlement with US authorities. $ 437.5 million of which was fined to the US Department of Justice and another 426.3 million to 20 US states. In addition, Moody's must take steps to strengthen the integrity, independence and quality of credit ratings. Standard & Poor's previously had to pay a total of 1.5 billion dollars (1.32 billion euros) in a settlement with the US Department of Justice, 19 states and the capital Washington. For comparison: The International Monetary Fund (IMF) is assuming total losses of 11.9 trillion US dollars in a calculation from August 2009 . A study by Deutsche Bank Research put the crisis-related reduction in global gross domestic product at four trillion US dollars.

Ratings

Moody's ratings map of Europe (as of 2016)

The credit ratings used by Moody's , which differ marginally from other rating agencies, are:

Conditioning Worthy (English investment grade )

  • Aaa - Reliable and stable debtors of the highest quality
  • Aa - Good debtors, slightly higher risk than Aaa
  • A - The overall economic situation must be taken into account
  • Baa - medium-quality debtors who are currently acting satisfactorily

Speculative (English speculative grade )

  • Ba - Very dependent on the overall economic situation
  • B - Financial situation is notoriously changeable
  • Caa - Speculative, low debtor income
  • Ca - usually there are already payment problems
  • C - in default of payment
  • NR - (English No vote rated not )

Bonds of speculative degrees are the so-called high yield , also called scrap or junk bonds (English junk bond ).

In addition, the numerical postfixes (attachments) "1", "2" and "3" are used for the credit ratings Aa to Caa. A “1” means that the credit rating is in the upper third of the main grade; analogously, “2” and “3” stand for the middle and lower third.

See also: Rating (contains a comparison table with the credit scales of the most important rating agencies) and a list of countries by credit rating

Web links

Commons : Moody’s  - collection of images, videos and audio files

Individual evidence

  1. ↑ Management team
  2. ↑ a b c FORM 10-K. Retrieved July 5, 2020 .
  3. ↑ Form from the US Securities and Exchange Commission regarding sales of Moody's Corporation shares by Berkshire Hathaway, Inc. (No longer available online.) Formerly original ; accessed on August 17, 2011 .  ( Page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Dead Link / ir.moodys.com  
  4. ↑ Company policy for reviewing related companies on moody's.com. (No longer available online.) Archived from the original on September 9, 2011 ; accessed on August 17, 2011 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / ir.moodys.com
  5. ^ Wells Notice in Wikipedia.
  6. ^ Moody's Faces Possible SEC Action. The Wall Street Journal , May 8, 2010 (English).
  7. ↑ Rudolf Hickel: Smash the banks , p. 100 u. 102, Econ Verlag, Berlin 2012. ISBN 978-3-430-20141-4
  8. ^ Rudolf Hickel: Zerschlagt die Banken , p. 102, Econ Verlag, Berlin 2012. ISBN 978-3-430-20141-4
  9. ↑ Moody's pays $ 864 million for upgraded ratings , Luxemburger Wort , January 14, 2017.
  10. ↑ IMF increases cost of financial crisis forecast to $ 11.9 trillion
  11. ↑ Bernhard Graf, Stefan Schneider: "How threatening are the medium-term inflation risks?" In: Deutsche Bank Research April 30, 2009 (PDF; 301 kB)