Moody's Management Presents at J.P. Morgan Ultimate Services Investor Conference (Transcript)

| About: Moody's Corporation (MCO)

Moody's Corp. (NYSE:MCO)

J.P. Morgan Ultimate Services Investor Conference Transcript

November 14, 2012 1:15 PM ET


Salli Schwartz - Head, Global Investor Relations


Andrew Steinerman - J.P. Morgan

Andrew Steinerman - J.P. Morgan

Its okay with everyone we are going to get going. This is the Moody’s presentation. This is the Ultimate Services Conference. Its track -- the whole track is the info services track. I’m Andrew Steinerman. I’m the Business Information Services Analyst here at J.P. Morgan. We’re so happy you could join us for the Moody's presentation. With us today is Salli Schwartz and she heads up Global Investor Relations.

Salli Schwartz

Thanks. Thank you, Andrew, and good afternoon to everyone. Today I will speak to you select slides from our third quarter 2012 investor presentation, which is posted on Moody's IR website at

I have three main messages I’d like to highlight. First, Moody's has ongoing robust opportunities for growth. Second, Moody's is well-diversified with multiple lines of business, presence in 28 countries and a balance of recurring and transaction revenue. And finally, Moody's generates strong cash flow and is committed to returning cash to its shareholders.

Let’s go ahead and turn to our first slide here. This is a snapshot of Moody's Corporation. The pie chart shows the breakout of Moody's $2.5 billion of revenue for the trailing 12 months ended September 30, 2012.

The rating agency is in green and comprises 68% of the total. Moody's Analytics is in orange and representing almost one-third of Moody's Corporation revenue in the trailing 12 months.

As you can see on this next slide, in the third quarter of 2012, Moody's total revenue increased 30% year over, excuse me, year-over-year. Moody's had double-digit revenue growth in all lines of business the rating agency and continued strong growth in all areas of Moody's Analytics.

My first main message is on the next slide, Moody's has ongoing robust opportunities for growth. The four boxes represent the building blocks that underlie our belief that Moody's can achieve on average annual low double-digit revenue growth. From the left, the first box notes that economic growth globally should continue to facilitate issuance in the debt markets.

The second box shows the secular trend of disintermediation or more companies look to the bond market for financing as global growth outstrips the ability and/or willingness of banks to provide funding. These two factors impact the volume of debt issuance, providing additional opportunity for Moody's to sell not only ratings but also research, data and analytics products.

The third box focuses on Moody's Analytics, along side the rating agency. We’ve built a world-class Data Analytics and Services business that like the rating agency helps institutions manage financial risk. While still smaller than the rating agency, Moody's Analytics has been growing more quickly and continues to benefit from the expansion of bank and insurance regulatory requirements.

And last but not least the final box is about pricing, we continue to pursue pricing opportunities across Moody's Corporation, aligning what we charge with the value we provide our customers. Now these four boxes total 11% to 13% with a low double-digit growth indicated at the bottom of the slide.

On the next slide, I’d like note in fact since the financial crisis, Moody's revenue has grown at a compounded annual growth rate of 13%, recovering in 2011 to a level that we last reached in 2007.

Nonetheless, I would be remiss not to state that our business has changed from what it was pre-crisis. While our business model remains intact, we become a highly regulated entity, which is added infrastructure and therefore cost to our operations.

As you can see here the composition of our revenue has also shifted away from structured finance revenue shown in the blue segment of the chart to corporate finance ratings in yellow and Moody's Analytics in brown. This diversification is a factor that I will come back to you shortly.

Just going to make one other note on this slide. As you can see here in the far right bar, our October 26th guidance for 2012 revenue growth is also in the mid-teens percent range. I’m going to spend a minute or two more here, on the couple other points that I think are interesting.

First, just intermediation, the challenges that Europe has faced over the last several years have actually accelerated the shift-to-debt financing out of the banks and into the bond markets.

As indicated in the chart on the left-hand side of this slide. We see this at a macro level by the growth in outstanding bonds in the orange line versus the decline in outstanding bank loans in the green line.

The chart on the right indicates bank versus bond market financing in Europe on the left and in the U.S. on the right. As you can see, the U.S. split is about 50-50, while Europe is closer to 80-20, still far more heavily banked.

While Europe may or may not move all the way to the U.S. balance any shift toward the bond markets even small can represent billions of dollars of issuance and additional ratings opportunities for Moody's.

We also now continued issuance of Yankee bonds by European corporates, which year-to-date through September 30th already reached $200 billion. From within Moody's, we also see evidence of disintermediation through our tracking of newly rated corporate issuers, particularly of high yield debt. We continue to see new names from across the globe, not only from Europe and the emerging markets, but also meaningfully from the U.S.

Turning here to slide eight, I do also want to highlight the market opportunities for Moody's Analytics, which we believe total almost $12 billion. Moody's Analytics has a strong if not leadership position in almost all of its markets and is particularly well-recognized for its credit expertise and award-winning regulatory compliance and reporting solutions.

Within Moody's Analytics, we have focused on developing products that our customers at U.S. must have. Some of our offerings assist our customers in meeting regulatory requirements, for example, we sell economic scenarios and modeling tools that help bank comply with stress-testing requirements. We also offer regulatory capital calculation and reporting solutions that banks use to follow Basel rules.

Other Moody's Analytics offerings help our financial customers -- financial services customers maintain their competitive positioning. As an example, our late 2011 acquisition of Copal, which provides offshore resources to investment banking, buy side clients, allows our customers to better manage their cost basis and therefore can keep a competitive edge.

As with the rating agency, Moody’s Analytics strives to create products that become the widely accepted standard in the market. This is most evident in the credit research, which we sell through our research, data and analytics or RDNA unit.

For those participating in anyway in the fixed income markets and even for those who participate in other markets but need to be aware of the debt markets there is only one source for Moody’s thinking and commentary on various credit issues.

Moving to the next slide, my second main message is that Moody’s is well-diversified with multiple lines of business, presence in 28 countries and the balance of recurring and transaction revenue. This diversification can benefit us during cyclical downturns in debt issuance and during challenging growth periods for one geographic region or another.

We experience the benefit of diversified lines of business during the second half of 2011, while debt issuance dipped and impacted revenue of the rating agency, which was down 3% year-over-year in the second half of 2011. Moody’s Analytics grew 13%, contributing to 2% growth year-over-year for Moody’s Corporation as a whole.

Geographically, for the first nine months of 2012, Moody’s U.S. revenue has grown almost twice as fast as our non-U.S. revenue. Even though, historically, international growth has often outpaced U.S. growth.

And with regard to type of revenue, as you can see in the bottom left bar chart, Moody’s Analytics, the third bar is almost 80% subscription revenue. And even within the rating agency during the third quarter of 2012, which was a high volume issuance period, almost 40% of revenue was recurring in nature.

Moody’s overall balance of transaction and recurring revenue allows it both flex to benefit during high-volume issuance periods as well as stability for quitter issuance times. My last main message is that Moody’s generates strong cash flow and is committed to returning cash to shareholders.

On slide 11, you can see that we’ve had nice growth in operating income, which is in the green bars. Over the last several years, we are a low capital intensity business. Capital expenditures are in the blue line across the bottom, leaving good free cash flow in the yellow line.

So, what are Moody’s capital allocation priorities? First, we invest back into our businesses, both organically and selectively through acquisition. For the ratings agency, most of investments but not all are organic in nature.

Moody’s has already invested in joint ventures and strategic alliances to extend its ratings franchisee to other markets and already has a global footprint for its ratings business. As you can imagine, at this stage there are very few acquisition targets to scale that are also actionable.

For Moody’s Analytics, we have been investing organically, primarily in implementation in sales staff for our software business. We also have had the opportunity in this unit to complete acquisitions. To date, we’ve focused our efforts on acquisitions that are bolt-on in nature.

We are looking for businesses that are adjacent to our existing franchise, and can leverage our core capabilities. We also tried to find businesses that are financially attractive and well-run and to pay reasonable prices for them. Accordingly, we look at hundreds of companies to find a handful of acquisitions.

As we do not have an acquisition quota, historically, there have been years we’ve acquired several businesses. In other years, we haven’t acquired anything. After investing in our business organically and via acquisition where appropriate, we look to return capital to shareholders through a mix of share repurchase and dividends.

As you can see on slide 13, in the left-hand chart, we have averaged a little less than $300 million in share repurchase each year for the past several years. For 2012, as of October 26, we said we expected to repurchase $225 million in Moody’s stock this year, obviously subject to market conditions and other ongoing capital allocation decisions.

With regard to dividends as shown on a per-share basis in the right-hand chart, we have consistently increased our dividend in line with earnings. And overall, we strive for a balanced approach to capital return, recognizing that our various shareholders have different priorities and preferences.

Before I finish, let me show you a summary of Moody’s 2012 guidance as of our last earnings call on October 26th. As you can see, we noted revenue and operating expenses growth, both in the mid-teens percent range. We highlighted an operating or EBIT margin of 40%, which would be up from 2011’s full-year margin of 39%.

This operating leverage is especially notable because we expected, even during the year when we have had ongoing incremental expenditures for various regulatory requirements. We also said that we expect pro forma earnings per share of $2.89 to $2.99, which is 17% to 22% growth over 2011’s $2.46 of pro forma EPS.

In closing, my three main messages, again are one, Moody's has ongoing robust opportunities for growth. Two, Moody’s is well diversified with multiple lines of business, a presence in 28 countries and a balance of recurring and transaction revenue. And three, Moody’s generates strong cash flow and is committed to returning cash to its shareholders. So taken together, these factors make Moody’s an excellent investment opportunity. Thank you.

Question-and-Answer Session

Unidentified Analyst

Thanks, Salli. I’m going to start with a couple of questions that I will read it out to the audience. We make time for both sets of questions. I want to ask about the 2012 issuance market. It’s been mostly refinancing, with that in mind do you any worries that you might have pulled forward or the issuance market might pull forward, what would've been 2013 issuances?

Salli Schwartz

Sure. Absolutely. Some of what we've been seeing is been pulled forward, that’s very clear. On the other hand, there is nothing changing about the macro environment. We continue to have, and it looks like we are going to continue to have low interest rates and investor interest in investing somewhere and there has been money flows out of the equity markets and into the bond markets.

As long as those things continue and we don't have -- we are going to have headline risk from things like fiscal cliff from Europe. But there should still continue to the issuance. What we'd like to see is issuance for some other of the traditional reasons that people go to market for.

So, for mergers and acquisitions, for share repurchase, for business expansion through capital expenditures, we are not really seeing a lot of that. So you could say that we’ve been essentially firing on the refinancing cylinder. And we are hopeful that will start to see these other elements of issuance pick up. And if we do, then issuance as a whole should continue to be very healthy. Even if we don't, to some extent, again the environment is not changing and we may continue to see refinancing to some extent.

Unidentified Analyst

You mentioned regulations a couple of times and how it’s evolved most recently. When you think about the U.S., what do you think the regulators goal is? Why would they even care about the credit rating agencies?

Salli Schwartz

We think an essential part, but we are obviously a meaningful part of the financial services markets. So, whether anyone likes it or not, they do have to pay some attention to what we're doing. I think the goal has been to make sure that the ratings that we are providing to the market are free of conflicts of interests. Yeah. I think that’s been the primary goal.

Unidentified Analyst

Okay. And do you feel like regulations, let’s get start with U.S. and then I will ask you separate. Have normalized the regulations that we have are going to be in place for a while? They’ve achieved their goals.

Salli Schwartz

Well, we have had U.S. regulation primarily through the Dodd-Frank Act, which passed in 2010. We continue to await final rules. From the Dodd Frank act, we have a draft rules currently and we are implementing underneath those. But we are still waiting to see what the ultimate rules look like.

So in the U.S., there was a good bit of discussion for a number of years over what made sense to do with the rating agencies and you can see the result of that in Dodd-Frank, and we’ve been implementing against that.

Outside the U.S., we’ve had two rounds of regulation in Europe, CRA–1, CRA–2. And now we are up to the third round of regulation. Where we stand currently on that, the three groups that are involved in the negotiation over that regulation, the European Commission, the European Parliament, the Council of finance ministers are currently in negotiation over a final tax, what the rules will look like and they’ve been in that process since about the summer. We don't have a set deadline or timeline, as to when they will finish but we are hopeful that it will be soon.

And it does appear that the negotiation discussions or trialogues as they call them, had spread up lately, which is promising. It appears that they prefer to get done sooner rather than later and I know, obviously, they had bank and other regulations to move on to. So, again, we are hopeful we’ll get the set of rules soon. And obviously we will implement accordingly.


And you think it will be all manageable?

Salli Schwartz

Well, it doesn't really matter. We have to get to it in any case, but what we’ve seen so far with three proposals. We started out with the European Commission's proposal in late November of last year. We had the European Council of Finance Ministers as well as the European Parliament, make their draft amendments in the spring and into early summer of this year and now that all three groups are getting together.

Some of the early on discussions around rotating out rating agencies, appears to have been pared back to some degree just to structured finance or even a portion of structured businesses, which is obviously a lot more manageable to use where that you mentioned.

On various other elements, I mean, the text keeps moving. So it’s hard to come on any one thing because it may not be the way it ultimately turns out. So in any case, we will obviously adjust our business accordingly and do what we need to do in order to comply with the regulation.

Andrew Steinerman - J.P. Morgan

So we’ll open it up for questions.

Unidentified Analyst

Just on the top of the regulation, can you give -- shed some more light in terms of what that’s meant in terms of cost structure. Are there number of jobs that exist in Moody’s today that didn’t use to exist before Dodd-Frank and to what extent has that driven OpEx up on a transitory basis versus a permanent basis?

I see even this year mid-teens growth in OpEx right in line with revenue. Does that reverse at any stage? Can margins ever get back to the 50% level or it is 40% than 50%?

Salli Schwartz

Sure. Margins are not going to go back up to the mid 50s level. We’re operating in a different environment now. We were largely unregulated or lately regulated prior to the financial crisis. And now we are, as I mentioned earlier, heavily regulated entity and we’ve got all the extra work that goes along side of complying with that additional regulation.

Yeah. It’s definitely created new positions in the company in terms of while we’ve to create new processes to do things differently or more in different ways than we’ve done before. And as things, just to get into a few details around document retention, around the way that we work through our processes, around the way that we train some of our staff.

So it’s gotten down until all the details of the business and that does mean additional processes, additional headcount, additional technology. We should not be overlooked that can be a significant expense to broaden our existing systems to take on all these extra things that we now need to do.

No, we won’t hit a mid-50s margin again. We are hopeful once we get to the other side of the Dodd-Frank implementation which we’ve been working on for sometime now. We need to see the final rules and make sure that we got everything up to power. And then we also need to see whatever CRA3 looks like and implement alongside that. And it could be something that’s much more smaller in content, it could be extensive.

We don’t know yet until we see the rules. But once we can get through that and assuming they don’t go for another round of regulation right away. We should start to see these costs level out of it. And hopefully -- I mean our hope is and our intention is to try in ‘13 some margin expansion with the business because we don’t have as many incremental regulatory costs.

Andrew Steinerman - J.P. Morgan


Unidentified Analyst

Hi. The question is on litigation. Can you give us some background on the Abu Dhabi case in the sense that you have 9 of the 11 or 10 of the 11 games associations dismissed, there is one remaining. Why wasn’t this also dismissed along with the rest of them?

Salli Schwartz

Sure. The one remaining claim that Moody’s has outstanding is fraud. And fraud is inherently fact based. You have to actually dig in and look at the facts surrounding the creation of the rating there in order to figure out whether or not, fraud was committed or it wasn’t.

So we went through a lengthy discovery process with the plaintiffs where they obviously looked at a good bit of our documents and interviewed a number of people involved in the process of creating the rating and otherwise. And that was necessary in order to establish whether or not fraud existed.

On August 17, the judge in the case issued a decision allowing that claim to move forward. With regard to Moody’s, she presented two pieces of evidence that she specifically said this don’t necessarily constitute fraud but reasonable people could disagree over what they mean. So I’m going to let the jury decide.

So we move ahead to a jury trial in that case in early May and we’ll see what they decide.

Andrew Steinerman - J.P. Morgan

Other questions on Moody’s?

Unidentified Analyst

In terms of the statute of limitation also expiring next year on structured finance deals ever issued in ‘07 or prior vintages. Can you talk about like when you think that statute of limitation naturally expires and is it like early 2013, mid 2013 and how it will relate with Abu Dhabi case in the sense that the trial would some how would take it over the hump in terms of the statute of limitation?

Salli Schwartz

Sure. I wish there were a one date I could point to and say as of that date, all will be fine but that just isn’t. My understanding is statute of limitation generally is that it ranges -- it depends on the type of claim. That broadly depends on the different jurisdiction. And there is a whole grey area around when the clock started ticking. And in fact, the entire body of case fall around statute of limitations and disagreements over various factors of the clock.

So I think all we can say generally is that the more time that passes, the better off we are and clearly as we get further and further away from the financial crisis is one measure of a start. That’s a good thing.

In terms of the Abu Dhabi case, fraud is again very specific to the facts of a case. So if we don’t prevail with the jury in the Abu Dhabi case. Then we’ll go to the appellate court and we will go through that process and we’ll see what they say but time will move on. But even if ultimately, there is fraud in a given instance and we don’t believe that there was in Abu Dhabi situation. We feel very strongly about that impact.

Even if there was fraud in that case, that doesn’t mean that any given rating that we otherwise produced, was produced in a fraudulent way. So fraud is very specific again to the facts of a case. The finding in Abu Dhabi is the separate matter.

Unidentified Analyst

Hi. Just two questions. One, could you say what the total compliance expense has been since 2011 or whenever that sort of picking up? And then second, could you talk about within the structure of finance market, recognizing that it’s much smaller today than it has been. Have there been changes that will persist in terms of Moody’s share or the structure, or pricing in that market that is different if or when it recovers?

Salli Schwartz

Sure. Okay. The first part, we actually haven’t and we’ve struggled a bit with this. We actually have not come up with one some figure of all the regulatory in compliance-related costs that have been added to the business. Since some of that is just because it’s hard to draw a line around it.

There are some systems costs as I mentioned earlier. Things that we’ve implemented but larger system that can do other things that aren’t regulatory related. So how do you carve up the system cost. There are people that we hire that are analytical staff in our rating agency.

We’ve hired them for regulatory purposes or because to comply with regulation but they are not regulatory people. So do you count them or do you not. I know if the business they’ve grown which you have hired them anyway. So it’s a little hard to draw a bright line around it.

For that reason, we haven’t wanted to provide a number that just on its basis going to not be completely accurate. With regard to the second question on structured finance, the big -- there are some areas in the market that are just missing right now. The U.S. RMBS space from a private deal perspective just hasn’t come back and that’s an area that -- at some point should but to what degree and when, I don’t know.

And that’s, I guess, you could say a little bit of an option on the stock. It’s not something that we’re counting on in the near-term but we do think it will happen over the longer term or hopefully even mid term.

Unidentified Analyst

Okay. Could you say the reverse to what areas with its structured finance just had?

Salli Schwartz

Sure. So just in the last quarter, in the third quarter, we had 14% growth in our structured finance business and we mentioned, in the U.S., we had seen very nice activity in CMBS as well as CLOs and that CLO deals we had five data from one of the banks. Five CLO deals that priced last week in the U.S. I think it was $2.2 billion and there has been over $37 billion of issuance in CLOs this year in the U.S.

I think it was $2.2 billion and there has been over $37 billion of issuance CLOs share in the U.S. So, it’s a -- that markets continue to pick up. Obviously, we are talking about a different level than we were pre-crisis but compared to last few years its been nice.

Andrew Steinerman - J.P. Morgan

On Moody’s questions.

Unidentified Analyst

Could you talk a little bit about the tuck-in acquisitions you have done in the past and they’ve made a difference with the company be so much different if you didn’t make those acquisitions?

Salli Schwartz

Sure. We’re very selective actually about our acquisitions. We are actually quite picky. And so, the ones that we have done what we try to buy as I mentioned earlier our high quality businesses on a standalone basis with good management teams and nice financials, we don’t look at ourselves as turnaround disk, for example. Some of the deals that we’ve done over the last few years we bought CSI in 2010, Canadian Securities Institute and they offer certifications for people entering Canadian Financial Services market.

You can imagine with certifications to be able to participate in the market you got have and actually from a regulatory perspective you have to have CSI’s certification and testing. That’s a standard business and that’s exactly like what we have with the rating agencies. So you can imagine why it’s attractive to us.

We’re moving into that. We had been building out our own certifications businesses. So it’s something that we actually have been green fielding and this was just an opportunity to acquire successful operation that had a nice piece of the Canadian market and trying to take that and build it out globally.

What we are doing, the CSI had started this before we bought it. But what we have been doing with them is trying to help them expand that platform they have in that business they have to other areas like China for example. Other acquisitions that we have done in the last couple years we bought company called Barrie & Hibbert in Scotland.

They do insurance risk software and insurance risk analytics and as these insurance company similar to the bank trying to comply with Basel III and all the various stress testing the regulatory requirements, the insurance companies have regulatory requirement Solvency II for example.

And it’s a natural extension for us with our financial services customer base to be able to offer some of those Barrie & Hibbert got us a nice client base in that space sort of employees who have knowledge about that space. And obviously the financials that came along with the business. So, that’s helped us to round out our software offering.

The other acquisition that we did late last year was a company called Copal in India, Copal offers, I mentioned, earlier offshored analytical resources. This is a great time for that business to the extent that the investment banks are downsizing.

They need to get the work done regardless and now they are able to do that through this offshored platform. We’ve also been working with Copal effectively bundle products and take products that we already sell that we can now put together with staff from Copal and offer the financial services client a full solution.

You don’t need to run the software yourself or do the analysis yourself. We can give you the data and the analytics here. We can give you the people to run it for you and we provide you a solution. So, all of these things, it’s a same client base. Moody’s analytics has one customer base, financial services companies and we’re doing what we can to deepen penetration within those clients.

Andrew Steinerman - J.P. Morgan

Any questions?

Unidentified Analyst

Just upper case, what’s the worst I guess, power guidance, so what terms of damages that can be sought for by a company?

Salli Schwartz

Sure. Currently and I pointed to our 10-Q filing. In terms of the recent run through we have some detail there of the damages. The numbers that we have in our Q. The total alleged damages of all the plaintiffs that were in the case were around $713 million. And this is alleged compensatory damages.

We noted in the Q that $303 million of those damages related to plaintiff who had been dismissed from the case back in August by the judge, but some of which made a motion for reconsideration effectively to get back in.

Just last week the judge actually reinstated two of the plaintiffs in the case. So, we do have some of the damages that we are off the table are now back on the table. We haven’t fully and I don’t need to be confusing about the numbers and again I point to Q. We haven’t fully updated the end net number, evenly because if we did a running commentary on every detail the case that changed it, we’d always be talking to you, so.

Andrew Steinerman - J.P. Morgan


Salli Schwartz

Yeah. It’s across all the defendants in the case and the defendants in the case in addition to us are S&P and Morgan Stanley.

Andrew Steinerman - J.P. Morgan


Salli Schwartz

I’ll note one other thing on that just to be fair. These are the plaintiff-alleged damages, not to say that we necessarily concur with their evaluation of the situations.

Unidentified Analyst


Salli Schwartz


Unidentified Analyst

Salli, when you listen to the storage high growth, high margin, great brand name, server role market, but it just seems like the question end up being how about this litigation, how about this regulation, what point do you think that investors are sort of missing that far two, three years?

Salli Schwartz

Well, it’s fair to ask a litigation questions I mean we -- that is a risk to the business that we have right now its unfortunate but it is what it is. Nonetheless, we hope and we are doing everything we can to manage through the case so. And we’ve made very good progress so far and to manage the remaining cases successfully and we believe that we have very good facts and if that the loss correctly apply that we will prevail with our outstanding cases.

But it’s fair to look at it. I would suggest or anyway ignore it. On the other hand, the business fundamentals as you pointed out are very, very strong and the multiple on our business is being held back by this litigation risk, fairly, unfairly is not mine to judge. But I mean the company itself has very good prospects and very good evidence of good performance overtime whether do the financial crisis well.

We’ve made a few multiple rounds of regulation and we have been -- our business has involved. And we’ve gone through all that and we’ve taken beyond just platform that everyone knows for the rating agency and build out this whole additional business that leverage is a lot of what we’ve created in the rating agency not the list of which is the long-term extensive credit expertise that we have and build out Moody’s analytics which provides lot of the things I was talking about in terms of just bolstering benefit to the rating agencies. So, I am very obviously, a bit about the business but I won’t ignore the legal.

Unidentified Analyst

And do you do any measurement of customer satisfaction besides just retention like did you anything like (inaudible).

Salli Schwartz

Yeah. And actually recently I am also glad to brought that up. Recently institutional investor named MIS as the best credit rating agency. So -- and that was a -- it was not poll we conducted. It was an institutional investor. And they are -- they went out and asked bunch of investors and another market participants who they felt was the best rating agency and we came up first. So very pleased about that. Moody’s analytics has an entire list or trophy while as ahead of the analytics business calls it of awards that its won and we really -- we take it well that the market seems to appreciate what we are trying to do there.

Most recently the one I recall the risk magazine named as a firm of the future in terms of our technology offering and that -- we won among seven vendors that it picked out as a firm of the future and that’s -- that market recognition sort of validates what we are trying to do there in terms of the position we think we have and the success we think we’ve had a bit of and we inspire to have more.

Andrew Steinerman - J.P. Morgan

Why don’t we end up with that note. There is a couple of minutes between sessions and so I appreciate everybody joining us.

Salli Schwartz

Thank you.

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