Moody's Corporation
| Company type | Public |
|---|---|
| Industry | Business and financial services |
| Founded | 1909 |
| Founder | John Moody |
| Headquarters | New York City , United States |
Area served | Worldwide |
| Products | Credit ratings, financial analysis software, financial services |
| Website | www |
Moody's Corporation is a U.S.-based enterprise specializing in business and financial services. It functions as the parent company for Moody's Ratings (previously known as Moody's Investors Service), a prominent American credit rating agency, alongside Moody's (formerly Moody's Analytics), which delivers financial analysis software and related services.
Established in 1909 by John Moody with the purpose of publishing statistics on stocks, bonds, and bond evaluations, Moody's was acquired by Dun & Bradstreet in 1962. In 2000, Dun & Bradstreet separated Moody's Corporation into an independent, publicly traded entity on the NYSE under the ticker symbol MCO. The company restructured in 2007 into two main units: Moody's Investors Service, dedicated to credit ratings, and Moody's Analytics, which focuses on financial analytical products. Moody's Corporation secured a position on the Fortune 500 list in 2021.
History
The origins of Moody's Corporation trace back to two publishing ventures initiated by John Moody, recognized as the pioneer of contemporary bond credit rating systems. In 1900, he released Moody's Manual of Industrial and Miscellaneous Securities and launched John Moody & Company. This publication provided comprehensive statistical data on stocks and bonds from sectors including finance, government, manufacturing, mining, utilities, and food industries, quickly selling out its initial edition.
By 1903, Moody's Manual had gained nationwide acclaim. The financial upheaval of the 1907 crisis led to significant market reforms such as the establishment of the Federal Reserve System. Due to a shortage of capital, Moody was compelled to sell his enterprise but re-entered the market in 1909 with Analysis of Railroad Investments, founding Moody's Analyses Publishing Company.
In 1962, Moody's Investors Service became part of Dun & Bradstreet, a firm specializing in credit reporting; however, both entities operated with considerable autonomy. By the late 1990s, Moody’s robust performance prompted investors to advocate for a separation. Consequently, in 1998 Dun & Bradstreet divested Moody’s publishing division to Financial Communications (which later became Mergent). In December 1999, Dun & Bradstreet declared plans to spin off Moody’s Investors Service as a standalone public company; this separation was finalized on September 30, 2000.
In December 2022, Moody’s was incorporated into the Dow Jones Sustainability World Index.
Moody's Ratings
Moody's Ratings, formerly referred to as Moody’s Investors Service, constitutes the bond credit rating segment within Moody’s Corporation and represents its principal business area. It evaluates debt instruments across various sectors including government entities, municipalities, corporations; managed investment vehicles such as money market funds, fixed-income funds, and hedge funds; financial institutions including banks and finance companies; as well as structured finance asset categories.
The company competes primarily with Standard & Poor’s (S&P) and Fitch Group, collectively recognized as the Big Three credit rating agencies. Moody’s Ratings plays an essential role in international capital markets by delivering credit risk evaluations that assist banks and other financial institutions.
Its rating scale extends from Aaa down to Caa, with numeric modifiers 1, 2, and 3 used to signify relative positions within each category (excluding Aaa, Ca, and C). These ratings provide investors with a standardized framework to assess the credit quality of various securities.
Moody's
Moody's, originally known as Moody's Analytics, was established in 2007 as a dedicated subsidiary focusing on services beyond credit ratings. This division specializes in economic research related to credit risk evaluation, financial performance management, modeling, structured finance analysis, and risk oversight. It offers proprietary software solutions, advisory services, and professional education programs—particularly emphasizing certification in risk management—primarily catering to the financial services industry.
Beginning in 1995 as a quantitative analysis group providing credit risk assessment tools under the name Moody's Risk Management Service, Moody's expanded its scope through key acquisitions such as KMV, Economy.com, Wall Street Analytics, Fermat International, Enb Consulting Ltd., the Institute of Risk Standards and Qualifications (iRSQ), CSI Global Education Inc., and Bureau van Dijk. These acquisitions have enhanced its service offerings and broadened its client portfolio.
The Moody's Foundation
Founded in 2002, The Moody's Foundation represents the corporate social responsibility branch of Moody's Corporation, concentrating on educational programs within mathematics, economics, and finance. It awards grants to accredited nonprofit organizations, educational institutions, and select governmental bodies.
Since 2006, the foundation’s premier initiative has been the annual Moody's Mega Math Challenge (M3 Challenge), conducted jointly with the Society for Industrial and Applied Mathematics (SIAM). This competition invites hundreds of high school teams to apply quantitative modeling techniques to practical financial challenges such as Social Security reform and the Economic Stimulus Act of 2008. The program has experienced considerable growth since 2010.
Moody's Research Labs
Moody's Research Labs, Inc. functioned as an innovation hub centered on financial risk modeling and analytical product development for various Moody's Corporation divisions. Under the leadership of President Roger Stein, it launched the Mortgage Portfolio Analyzer in March 2011 via Moody's Analytics to assist portfolio managers in credit risk evaluation. The Labs were discontinued in February 2012.
Lawsuit settlements
October 2011: Moody's resolved allegations from Connecticut accusing it of issuing unduly low ratings on public bonds.
July 2012: A settlement was reached with shareholders concerning lawsuits related to structured finance ratings.
April 2013: Moody's averted its initial jury trial by settling with fourteen plaintiffs—including Abu Dhabi Commercial Bank and King County, Washington—who claimed inflated ratings on structured investment vehicles.
January 2017: Moody's Corporation, along with Moody's Analytics and Moody's Investors Service, consented to an $863 million settlement with the U.S. Department of Justice and 21 states regarding their involvement in rating Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs) before the financial crisis. Among those signing were California Attorney General Kamala Harris and Missouri Attorney General Josh Hawley.
March 2021: Moody's reached a settlement with the European Union addressing conflicts of interest issues, resulting in a €3.7 million ($4.35 million) penalty.
Acquisitions
In 2019, Moody's Corporation secured a controlling interest in Four Twenty Seven (427), a climate risk data company based in California that evaluates the physical impacts of climate change. This acquisition underscores the increasing awareness of how global warming may affect the credit ratings of both governments and corporations internationally. Further broadening its risk analytics capabilities, Moody's acquired Risk Management Solutions (RMS) from Daily Mail and General Trust in 2021 for $2 billion. RMS is recognized for its expertise in risk modeling within the insurance and reinsurance industries.