Weak Bond Issuance Market, Stronger Dollar Weigh on Moody’s Outlook

Wide-moat Moody’s reported a soft quarter with revenue declining 11% as the bond issuance market has substantially weakened. With much of Moody’s revenue (45% in 2021) coming from outside the United States, a stronger dollar will weigh on revenue although this will be partially offset as nondollar expenses serve as a partial hedge. As we update our model, we expect to reduce our fair value estimate by a single-digit-percentage to reflect issuance headwinds.