![]() ![]() ![]() The company had $1.7 billion of cash as of March 31, 2021. Moody's expects MSCI will maintain over $500 million of cash and cash equivalents. Debt-funded acquisitions are also a risk, although the pace and scale of M&A has been moderate historically.The SGL-1 speculative grade liquidity rating reflects Moody's assessment of MSCI's liquidity profile as very good. Governance risk is considered moderate as Moody's anticipates MSCI may incur additional debt to maintain cash return levels in excess of internally generated free cash flow, temporarily driving debt to EBITDA above 4 times. Moody's expects its largest customer will account for over 10% of total revenues and over 50% of AUM-based ETF fees, while the top 10 customers will be about 25% of revenue.All financial metrics cited reflect Moody's standard adjustments.MSCI is a service provider to sophisticated financial market businesses, so there are limited environmental and social risks. Index revenues could be volatile because they are correlated to the popularity of passive investment strategies and the value of assets under management ("AUM") in exchanged-traded funds linked to its indexes. Moody's expects EBITDA of over $1 billion and EBITDA less capital expenditures to interest expense around 6 times, driven by growth in institutional investment strategies including equity exchange traded funds using its widely-referenced international equity indices, and steady subscriber retention rates around 95%. However, high EBITA margins of around 50% and solid free cash flow to debt anticipated to be around 13%, provide ratings support. Revenue of almost $1.75 billion for the 12 months ended Mais small compared to many other service industry issuers also rated at Ba1. The outlook remains stable.RATINGS RATIONALE"Increased revenue size, very high profit rates, Moody's expectations for ongoing institutional investor interest in its custom factor indices, including ESG-focused ones, and predictable although still opportunistic financial strategies lead to the upgrade to Ba1," said Edmond DeForest, Moody's Vice President and Senior Credit Officer.The Ba1 CFR is supported by a growing, recurring subscription base of investment risk management and decision support tools and equity index products. ![]() The speculative grade liquidity rating remains unchanged at SGL-1. Rating Action: Moody's upgrades MSCI's CFR, senior unsecured to Ba1 from Ba2 outlook stableGlobal Credit Research - About $4 billion of debt upgradedNew York, Ap- Moody's Investors Service ("Moody's") upgraded MSCI Inc.'s ("MSCI") corporate family rating ("CFR") to Ba1 from Ba2, probability of default rating ("PDR") to Ba1-PD from Ba2-PD and senior unsecured rating to Ba1 from Ba2. ![]()
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