Very Soft Issuance Markets Take a Toll on Moody’s

Amid rising interest rates, quantitative tightening by the Federal Reserve, and increased economic uncertainty, the credit market has been very soft. Against this backdrop, Moody’s revenue declined by 16%, with a 36% decline in ratings revenue and a 53% decline in transaction-based revenue. As we lower our near- and medium-term ratings revenue forecast, we are reducing our fair value estimate on wide-moat-rated Moody’s to $290 from $310 per share. We are taking a cautious view as we expect interest rates to continue to increase and bond market volatility to continue.