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Moody's Corporation (NYSE:MCO)

Q2 2012 Earnings Call

July 26, 2012 11:30 a.m. ET

Executives

Salli Schwartz - Global Head of Investor Relations

Raymond McDaniel - President and Chief Executive Officer

Linda Huber - Executive Vice President and Chief Financial Officer

Michel Madelain - President and Chief Operating Officer, Moody’s Investors Service

Mark Almeida - President, Moody’s Analytics

Analysts

Peter Appert - Piper Jaffray

Jennifer Huang - UBS

Craig Huber - Huber Research Partners

Douglas Arthur - Evercore Partners

Operator

Good day, and welcome ladies and gentlemen to the Moody’s Corporation Second Quarter 2012 Earnings Conference Call. At this time I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company we will open the conference up for question-and-answers following the presentation.

I will now turn the conference over to Salli Schwartz, Global Head of Investor Relations. Please go ahead.

Salli Schwartz

Thank you. Good morning everyone. And thanks for joining us on this teleconference to discuss Moody’s second quarter results for 2012. I am Salli Schwartz, Global Head of Investor Relations. Moody’s released its results for the second quarter of 2012 this morning. The earnings press release and a presentation to accompany this teleconference, are both available on our website at ir.moodys.com. Ray McDaniel, President and Chief Executive Officer of Moody’s Corporation will lead this morning’s conference call. Also making prepared remarks on the call this morning is, Linda Huber, Chief Financial Officer of Moody’s Corporation.

Before we begin, I call your attention to the Safe Harbor language, which can be found towards the end of our earnings release. Today’s remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the Act, I also direct your attention to the management’s discussion and analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31, 2011, and in other SEC filings made by the company which are available on our website and on the Securities and Exchange Commission’s website. These, together with the Safe Harbor statements, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements.

I would also like to point out that members of the media may be on the call this morning in a listen-only mode. I’ll now turn the call over to Ray McDaniel.

Raymond McDaniel

Thank you, Salli. Good morning and thank you to everyone for joining today's call. I will begin by summarizing Moody’s second quarter 2012 results. Linda will follow with additional financial detail and operating highlights, and I will then speak to recent regulatory developments and finish our comments with our outlook for 2012. After our prepared remarks we will be happy to respond to your questions.

Second quarter revenue was $641 million, increased 6% over the prior year period, reflecting solid growth in public finance and structured finance, as well as continued strong results for Moody’s Analytics. Expenses for the second quarter were $362 million, an 8% increase from the second quarter of 2011. Operating income for the second quarter was $279 million, a 3% increase from the prior year period. Diluted earnings per share was $0.76 for the second quarter, decreased $0.06 from the prior year period which had included a $0.06 favorable tax impact related to a foreign tax ruling and a $0.03 legacy tax benefit.

While market conditions remain volatile, we are reaffirming our 2012 EPS guidance range of $2.62 to $2.72, and still expect to be towards the upper end of the range. Turning to the year-to-date performance, revenue for the first six months of 2012 was $1.3 billion, a 9% increase from the first half of 2011. Expenses were $740 million, up 12%, and operating income of $548 million, increased 5% from the prior year period.

Diluted earnings per share of $1.52 for the first half of 2012, increased $0.03 from the prior year period, which again had included a $0.06 favorable tax impact related to a foreign tax ruling a $0.03 legacy tax benefit. Revenue of Moody’s Investors Service for the first six months of 2012 was $894 million, an increase of 5% from a year ago. Moody’s Analytics revenue of $394 million was 19% higher than the prior year period.

I will now turn the call over to Linda to provide further commentary on or financial results and other updates.

Linda Huber

Thanks, Ray. I will begin with revenue at the company level. As Ray mentioned, Moody’s total revenue for the quarter increased 6% to $641 million. U.S. second quarter revenue increased 9% to $344 million, while revenue outside the U.S. grew 2% to $297 million and represented 46% of Moody’s total revenue, down slightly from 48% in the year ago period. Recurring revenue of $338 million represented 53% of the total, up from 51% in the prior year period.

And looking now at each of our businesses. Moody’s Investors Service revenue for the quarter was $441 million, about flat to prior year periods. Foreign currency translation unfavorably impacted MIS revenue by 3%. U.S. revenue for MIS increased 5% over the prior year period, while revenue outside the U.S. decreased 5% and represented 42% of total ratings revenue. Global Corporate Finance revenue in the second quarter declined 4% from the year ago period to $192 million. Revenue was down 4% year-over-year both inside and outside the U.S.

The decline in Global Corporate Finance revenue reflected weaker speculative grade bond and bank loan issuance against a near record prior year period. Investment grade issuance for non-financial corporate was higher year-over-year, reflecting continued historically low borrowing rates. Global Structured Finance revenue for the second quarter was $91 million, 5% above prior year period. In the U.S. revenue increased 22% year-over-year primarily due to strength in ratings of collateralized loan obligations and asset backed securities.

International Structured Finance revenue was down 9% reflecting issuance declines in European covered bonds and after-tax securities. Global financial institutions revenue of $78 million decreased 2% from the same quarter of 2011. U.S. revenue was essentially flat as compared to the second quarter of 2011, while non-U.S. revenue was down 3%. Global revenue for the public, project and infrastructure business rose 12% year-over-year to $81 million. Revenue was up 19% in U.S., primarily due to gains in ratings for regional government and higher education. While non-U.S. revenue declined 3%.

Turning now to Moody’s Analytics. Global revenue for Moody’s Analytics of $200 million was up 19% from the second quarter of 2011. Slightly more than half of growth was from the late 2011 acquisitions of Copal Partners and Barrie & Hibbert. Excluding the impact of foreign currency translation, revenue grew 21%. U.S. revenue grew by 23% year-over-year to $86 million. Non-U.S. revenue grew to 17%, to $114 million and represented 57% of the total Moody’s Analytics revenue.

Globally, revenue from research, data and analytics of $121 million, increased 9% from the prior year period and represented 61% of the total MA revenue. We continue to see demand for credit research via our CreditView offering and solid growth in data licensing arrangements. Revenue from enterprise and risk solutions of $52 million, grew 24% from last year reflecting the December 2011 acquisition of Barrie & Hibbert and growth in the base business.

Due to the variable nature of project timing, enterprise risk solutions revenue remains subject to quarterly volatility. Professional services revenue grew 84% to $27 million, reflecting the acquisition of a majority stake in Copal Partners in November 2011.

Turning now to expenses. Moody’s second quarter expenses were $362 million, an increase of 8% compared to second quarter 2011 or a 10% increase excluding the impact of foreign currency translation. Compensation expense accounted for over half of the year-on-year expense increase, and was due to increased headcount from the acquisitions in late 2011, and from growth in our existing business. Incremental non-compensation expense was driven by higher information technology expense, supporting business growth and regulatory initiative, as well as purchase price amortization associated with acquisition.

Moody’s reported operating margin for the quarter was 43.5%, down from 44.6% in the second quarter of 2011. Our effective tax rate for the quarter was 33.6% compared with 27.8% for the prior year period. The increase in effective tax rate is primarily due to lower tax rate in 2011 resulting from a favorable foreign tax ruling.

Now I will provide an update on capital allocation. During second quarter of 2012, Moody’s repurchased 2.7 million shares at a total cost of $100 million, and issued 0.3 million shares under employee stock-based compensation plan. Shares outstanding as of June 30, 2012, totaled 222.3 million representing a 3% decline from the year earlier. As of quarter end, Moody’s had $800 million of share purchase authority remaining under its current program. We still expect full year 2012 share repurchases of approximately $200 million subject to available cash, market conditions and other ongoing capital allocation decision.

As of June 30, 2012, Moody’s had $1.2 billion of outstanding debt and $1 billion of additional debt capacity available under our revolving credit facility. Cash and cash equivalents were $824 million, as of June 30, 2012. A decrease of $114 million from a year earlier. Approximately 85% of our cash holdings are maintained outside the U.S. We remain committed to using our strong cash flow to create value for shareholders, while maintaining sufficient liquidity.

And with that, I will turn the call back to Ray.

Raymond McDaniel

Thanks, Linda. I will continue with an update on regulatory developments. First in the U.S. We continue to expect the SEC will adopt final rules relevant to nationally recognized credit rating agencies by year-end 2012 and publish its feasibility study on establishing an alternative system for allocating rating assignments for structured finance products by about the same time.

Both banking and securities regulatory authorities continue to assess their use of ratings and regulations and are in the process of developing potential alternative measures as replacements. Turning to Europe. Moody’s was registered in European Union in late October 2011, and our European operations are under the full examination and oversight authority of the European Securities and Markets Authority or ESMA. As discussed on previous calls, in November 2011 the European Commission released new regulatory reform proposals for the rating agency industry, commonly referred to as CRA3, that seek to address among other ideas, the use of ratings in regulation, business models, competition, rotation of rating agencies and liability.

If implemented as originally proposed by the commission, many believe CRA3 would likely have significant negative implications for Europe’s credit markets. Consequently, the debate among public policy makers and the private sector has focused on CRA3s potential damaging impact on the broader European economy and European issuers access to debt markets. The European legislative process requires that the European Parliament and council of finance ministers of the individual EU member states, each produce its own version of the tax and then enter into discussions with the commission.

During these discussions the three institutions seek to resolve any differences among their respective drafts. And once a compromised document produce, put to a vote. In May of June of 2012, the council and the Parliament respectively finalized their positions on CRA3. We expect the necessary compromise discussions to continue through the autumn months and for CRA3 to be finalized before year-end 2012. It is still too early to assess what the likely outcome of these deliberations would be. As always we will continue to advocate globally consistent approaches that align with the G20 statements and directives.

I will conclude this morning’s prepared comments by discussing our full year guidance. Moody’s outlook for 2012 is based on assumptions about many macroeconomic and capital market factors including interest rates, corporate profitability and business investment spending. Merger and acquisition activity, consumer borrowing and securitization and the amount of debt issued. There is a important degree of uncertainty surrounding these assumptions, especially as they relate to Europe. And if actual conditions differ from these assumptions, Moody’s results for the year may differ materially from the current outlook.

Our guidance assumes foreign currency translation at end of quarter exchange rates. As I mentioned earlier, we are reaffirming our 2012 EPS guidance range of $2.62 to $2.72 and still expect to be towards the upper end of the range. Now that we have reaffirmed our EPS guidance, certain components of 2012 guidance have been modified to reflect our current view of credit market conditions. For Moody’s overall, the company still expects full year 2012 revenue to grow in the low double-digit percent range. Full year 2012 expenses are also still projected to increase in the low double-digit percent range. Full year 2012 operating margin is still projected to be approximately 39%, including the full year impact of our fourth quarter 2012 acquisitions.

Our effective tax rate is still projected to be approximately 33%. As Linda mentioned earlier, we still expect full year 2012 share repurchase of approximately $200 million subject to available cash, market conditions and other ongoing capital allocation decisions. Capital expenditures are still projected to be approximately $60 million to $70 million. We still expect approximately $100 million in depreciation and amortization expense. Incremental compliance and regulatory expense is still projected to be in the $10 million to $15 million range.

For the global MIS business, revenue for full year 2012 is still expected to increase in the mid to high single digit percent range. Within the U.S., MIS revenue is still expected to increase in the low double-digit percent range, while non-U.S. revenue is still expected to increase in the low single digit percent range. Corporate finance revenue is now projected to grow in the high single to low double-digit percent range. Revenue from each of structured finance and financial institutions is still projected to be flat to slightly up, while public project and infrastructure finance revenue is still expected to increase in the mid-teens percent range.

For MA, full year 2012 revenue is still expected to increase in the high teens percent range. Within the U.S., MA revenue is now expected to increase in the high teens to 20% range, while non-U.S. revenue is still expected to increase in the high teens percent range. Revenue growth is still projected in the mid-single digit percent range for research, data and analytics, and in the low 20s percent range for enterprise risk solutions reflecting the December 2011 acquisition of Barrie & Hibbert, as well as growth in the base business.

Professional services revenue is now projected to grow by approximately 75%, inclusive of revenue from the late 2011 acquisition of the majority stake in Copal Partners, and growth in MA’s existing financial training and certification business.

This concludes our prepared remarks and joining us for the question and answer session is Michel Madelain, President and Chief Operating Officer of Moody’s Investors Service; Mark Almeida, President of Moody’s Analytics. We would be pleased to take any questions you might have.

Question-and-Answer Session

Operator

(Operator Instructions) We will go first to Peter Appert with Piper Jaffray.

Peter Appert - Piper Jaffray

Thanks, good morning. So, Ray, just a couple of follow up questions starting out on the regulatory environment. So what's your thought in terms of the move to replace ratings in regulations in term of the implications of that. Are you seeing any changes in the portion of debt securities that are issued that are rated versus not rated? That was part one. And then part two, with regard to CRA3, the liability issue seems like it might be the bugaboo. What's your read on how that’s going to play out. Thanks.

Raymond McDaniel

On the ratings in regulation or reliance on ratings, there have been effort both in the U.S. under Dodd-Frank and as part of the some of the European proposals on discussions to reduce or eliminate the use of ratings in regulation. I think from prior calls you know that we are very sportive of that. But frankly the progress on that has not been particularly strong in my view. And there have been probably as many changes in use of ratings in regulation that would seek to increase the use of ratings as there are to decrease the use. So net-net, I don’t think there has been a lot of change.

If nothing else, what we would argue for is at least to reduce the mechanistic use of ratings in regulation. So it reduces some of the [core] risk or pro-cyclicality that’s associated with this. And we do have some views on how that can be done. So as I said, we are supportive of the overall effort even if it has not made a lot of progress and we don’t see it having a negative impact on our business.

And then with respect to liability, yes, we are playing close attention to the discussions in Europe around liability and obviously we will accommodate our business to make sure that we have the maximum protections we can have depending on what kind of liability regime the Europeans determine for our business. And there are -- again there are ways for us to mitigate those risks but we have to wait and see what the final conclusions are at these three party discussions that go on the fall.

Peter Appert - Piper Jaffray

So you are assuming, Ray, that there will be higher levels of liability in that final version of this thing?

Raymond McDaniel

I think there is a good chance that there will be. The question really is the degree and what we will do operationally to manage that risk back down.

Peter Appert - Piper Jaffray

And then specifically though, are you seeing a change in the percentage of publicly issued debt securities, the rated versus unrated.

Raymond McDaniel

No. I mean except to the extent that there are issues coming in domestic markets that might have previously not been issuers. That’s where we have to make sure we continue to provide coverage. But for both the existing issuer base and for most of the new issues that are coming to market we are providing, we continue to provide very comprehensive coverage.

Peter Appert - Piper Jaffray

And then, Linda, one other thing, in terms of -- could you just talk a little bit about the pipeline in terms of what you guys are seeing currently in terms of issuance. And then on the cost dynamics, the cost growth slowed considerably on a year-to-year basis in the second quarter versus the first. What was the differential?

Linda Huber

Sure Peter. Let me take the pipeline question first. And the information that I am quoting here is coming from Morgan Stanley. Let me talk first about....

Peter Appert - Piper Jaffray

Oh, how insulting that you are quoting them.

Linda Huber

Sorry about that. Investment grade issuance first, Peter, and then high yield. Year-to-date investment grade volume here in the U.S. is $512 billion which is up 6% from 2011. First half volume, $469 billion, it’s the largest first half on record, 5% more than the first half of 2008 which is recent high, and more than the first half of 2011. The month-to-date volume has been $51 billion and close to the July 2010 record amount of $59 billion, we may have surpassed that. The last week has been okay and the pipeline looked reasonably good. Right now we have historically low interest rates. I just saw before coming up here the 10-year’s at 1.42, so we are sort of back to Eisenhower level long-term rates. So that is helpful to the pipeline.

And high-yield year-to-date volume is $187 billion, that’s down 13% versus 2011. The first half volume is $152 billion which is down 25% from the first half of last year. Leverage loans year-to-date volume $136 billion, which is down 30% from 2011 year-to-date. And first half volume was $123 billion which is down 31% from the first half. Now high yield market is grinding tighter. We saw a little bit more activity recently. Bu the pipeline seems to be pretty well constrained right now looking at the $10 billion of visible high yield issuance in the pipeline and $13 billion in leverage loans in the pipeline. And again that’s one where you are going to see a little bit of movement depending on who you source for information.

But generally again, high yield pipeline, limited investment grade pipeline, pretty strong. Now on cost costs, Peter, you are correct, we did move down from the first quarter to the second quarter. A couple of things going on there. The first quarter had some unusually high expenses in it. Our big comp quarter is the first quarter and the second quarter has some reductions in that. First quarter obviously was stronger so we had a higher incentive compensation amount and the second quarter was little bit more reasonable. And so that basically is the main driver of what's happened with the quarter-over-quarter expenses.

Operator

We will go next to Jennifer Huang with UBS.

Jennifer Huang - UBS

So as things like debt issuance in Europe look pretty weak in the second quarter year-over-year. And I think your European MIS revenues were down about 5%, which seems rather stable. So can anybody just talk about what are some of the drivers behind this trend that you guys saw in the revenues in Europe in MIS?

Raymond McDaniel

Yes, Europe was softer in the second quarter. And there were a number of lines that saw year-on-year quarterly decreases. But this was mitigated by the fact that we do have a large number of frequent issuer pricing agreements in Europe. And those provide a steadier base of revenue. What we are missing though is the growth opportunity in Europe that comes from issuance and that’s why we would look for whether market tone and sentiment improves in the second half or remains as volatile and choppy as it has been in the first half. Because that would bring more of the speculative grade credit to market and those are the credit that are less likely to be under frequent issuer pricing agreements and would increase our transaction based revenue.

Also to the extent that there is a strengthening in market tone in Europe, I would expect that that’s going to be a good news for structured finance issuance, so we would have to keep a close eye on that. And that is transaction-based revenue for the most part.

Jennifer Huang - UBS

Okay. And then in terms of the structured finance products, can you just about the profitability of those deals? Are they still -- I mean are they higher than from the corporate side?

Raymond McDaniel

It’s similar, or there are not market differences in profitability subject to cyclical upturns and downturns. And so we have a downturn in structured finance and an upturn in another area that obviously will be more profitable. But looking through those cycles, I wouldn’t identify any significant differences.

Jennifer Huang - UBS

Okay. And then I just have one more on the expense side. So I think from the first quarter you had mentioned, you expect some ramp in expenses throughout the year to the tune of about $40 million. Is that still your expectation looking at the full year now? And if so, just wondering how much flexibility you have in that, just because it seems like in the second quarter you weren’t able to manage the expenses down quite a bit.

Linda Huber

Jen, it’s Linda. Let me talk about the back half of the year compared to the first half of the year. And let me start by saying that we don’t give quarterly guidance so you are going to have to do the math on some of it. On the revenue side, we expect that or revenue pattern will lay out approximately like it did this last year. With our revenue coming in with a balance towards the first half of the year with a little bit of weakening towards the second half of the year. So the split on that we are thinking is about 52% first half, 48% back half. So we do, at this point, expect revenue in the second half of the year to be a little bit lower.

Now on the expense side, you are right, we had talked about $40 million ramp coming off our $377 million first quarter expense number. We did do better in the second quarter. We do expect $40 million expense ramp from $377 million as we get to the fourth quarter. And obviously that was would result in a tick-up in expenses in the third quarter and that will move up in the fourth quarter.

Now the reason for that is we have more headcount coming on in the second half of the year. We also have raises that come into play in the back half of the year and some other expenditures that we have to make in terms of IT, particularly to get ready for Dodd-Frank compliance. Many of those are expensed items, so they are changes to existing systems which have to be expensed as opposed to building new systems which are of course capitalized.

So, yes, we expect the continued expense ramp. We expect that revenue may weaken a bit and traditionally our pattern has been that the third quarter is the most challenged on the revenue side. So that might make for a little bit of a tougher situation in the third quarter. So that’s how we see it laying out at this point.

Operator

(Operator Instructions) We will go next to Craig Huber with Huber Research Partners.

Craig Huber - Huber Research Partners

First a couple of cost questions. What was the incentive compensation expense in the quarter?

Linda Huber

Sure, Craig. I think it’s $27.5 million.

Craig Huber - Huber Research Partners

So that was basically flat with the first quarter, correct?

Linda Huber

That’s right. Now last year -- just interestingly, Craig, last year we had a different pattern. Last year we had in first quarter $29.4 million and ramping up to $35 million in the second quarter because of course second quarter was very strong last year. So as I said this year $27.5 million is flat, first quarter to second quarter.

Craig Huber - Huber Research Partners

And then also back on the overall second quarter cost. I remember in your remarks from three months ago about how you thought the cost pattern would go. And also looking at history here, based on what I can see here over the last 10 plus years, you have never had a quarter where costs in the second quarter were down from the first quarter like we had here sequentially. What changed in your mind versus your original budget you talked about three months so that costs were actually down versus the first quarter?

Linda Huber

Sure. Of course we are looking to accrue incentive compensation based on how we view against our forecast. And in the first quarter we put up heavier incentive compensation view because we had a greater amount of completion. So in the second quarter that was a little bit lighter. We also had some other issues involving FX which were a little bit better for us in the second quarter. But generally, we are being careful with expenses. We are being careful with hiring. We are being very thoughtful about how we are managing the business and with the market outlook being as choppy as it is, we have to be very thoughtful about what we are doing and how we are doing it. So I think those would be the main drivers. And I would ask Ray if he had any further comments he would like to make about that.

Raymond McDaniel

No, just to emphasize that I think part of the pattern that you are seeing, this difference in Q1 to Q2, is really explained by Q1 as much as it’s explained by Q2. Because we did have the higher incentive accruals in the first quarter based on the strength of the markets at that time.

Craig Huber - Huber Research Partners

Versus your budget you are saying, because it’s the same number in both quarters of course?

Raymond McDaniel

No, exactly, exactly.

Craig Huber - Huber Research Partners

Okay. And then let me ask some questions -- with your four main segments within ratings, can you breakout, Linda, the transaction percentage versus non-transaction across the four segments please.

Linda Huber

Sure. The corporate, Craig, we will do as usual, transaction first and relationship second. For CFG, we are running 70:30 transaction relationship, structured is 57:43, FIG is 35:65, and PPIF is 62:38. Total for the rating agency is 60:40. MA is reverse, 20% transaction revenue and 80% relationship. Total for MCO is 47% transaction and 53% relationship.

Craig Huber - Huber Research Partners

And then also breaking out the revenues differently, can you do similar percentages, like within corporate financial, high-yield bank loans, investment grade and then that monitoring CP, medium-term notes. Do that for all the four segments?

Linda Huber

Sure. Starting with corporate finance, Craig. The total number of corporate finance dollar amounts for the second quarter is $191.5 million. Investment grade made up 22% of that revenue in the second quarter. High-yield made up 17% of the revenue. Bank loans 18%, and other accounts 43%. Going on to FIG revenues, total amount of 77.8, again FIG is pretty consistent quarter-over-quarter. Banking 67% of the revenue, insurance 27%, and managed investments 7%. Going on to PPIF, the total number was $81.2 million, and 54% of that came from public finance and sovereigns. Again that was an increase than what we usually see. Munis at 6%, projects and infrastructure at 40%, and again $81.2 million was the total.

And then I think we missed structured. Total number of $90.7 million. Asset backed securities 32% of that. Residential mortgage backed securities 24%, commercial real estate 20%, and derivative 24%.

Operator

We will go next to Doug Arthur with Evercore.

Douglas Arthur - Evercore Partners

Yeah, Ray, just on international trends. If Europe stays choppy for the balance of the year, can you talk about trends outside of Europe? In emerging markets, Asia, Latin America and how, if those strengthen or continue to be strong or how you are going to get back to increasing your MIS international revenues?

Raymond McDaniel

Sure. We are expecting the international business outside of the EMEA to be relatively stronger than Europe or EMEA. And the concern will be the extent of any contagion from Europe and what that might do to business confidence and business expansion in other international markets. And, frankly, that’s a tough call to make. So we think that other international is going to perform reasonably well for the second half. It is smaller than our European business but it’s subject to at least some of the choppiness and volatility risk that we see in Europe. And I will ask Michel Madelain, if he has any additional comments he would like to make on that.

Michel Madelain

Thank you, Ray. No, think you know the scale of the business as you see is quite different in Asia and Latin America compared to Europe. But we see that as much more stable and robust than we see the choppiness we see in Europe today.

Douglas Arthur - Evercore Partners

Can you put a ballpark range around the scale relative to Europe?

Michel Madelain

Yeah. Europe, overall of Moody’s Corporation business, Europe represents about 30% and Asia represents about half of that. Asia and Latin America.

Operator

That concludes today's question and answer session. At this time I will turn the conference over to Ray McDaniel for any additional or closing remarks.

Raymond McDaniel

Okay. Before we end the call I just want to announce that Moody’s will host its Investor Day on Wednesday, September 12, in New York City. Attendance is by invitation only and the event will be webcast and further details will be provided on our investor relations website ir.moodys.com. Thanks to all for joining the call today and we look forward to seeing many of you in September.

Operator

This concludes Moody’s third quarter earnings call. As a reminder a replay of this call will be available after 4 p.m. Eastern Time on Moody’s website. Thank you.

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