Moody’s Fully Acquires GCR Ratings, Deepening Presence in Africa’s Domestic Credit Markets

Rhea-AI Summary

Moody’s (NYSE:MCO) has fully acquired Global Credit Rating Company (GCR), a prominent domestic credit rating agency active in Africa. This follows Moody’s 2022 acquisition of a majority stake in GCR. The deal enhances Moody’s presence in Africa’s domestic credit markets, important for the continent's economic development. Rob Fauber, CEO of Moody’s, expressed excitement about expanding their ratings presence through GCR. Marc Joffe, CEO of GCR, noted the acquisition as a milestone, emphasizing the potential to develop more customer solutions. GCR operates in South Africa, Nigeria, Senegal, Kenya, and Mauritius, and will continue as an affiliate of Moody’s with its own methodologies and management. The transaction terms were undisclosed and it won't materially impact Moody’s 2024 financial results.

Positive

• Moody’s enhances its presence in Africa's domestic credit markets.
• GCR's acquisition provides Moody’s with deeper local market insights.
• Potential to develop more customer solutions, including credit ratings, credit risk solutions, and ESG capabilities.
• GCR will continue to operate with its own methodologies and management, ensuring continuity.

Negative

• The financial terms of the acquisition were not disclosed.
• The acquisition will not have a material impact on Moody’s 2024 financial results.

Insights

Financial Analyst

Moody's acquisition of GCR signals a strategically significant move, positioning Moody’s strongly in Africa's burgeoning domestic credit markets. From a financial perspective, this deal consolidates Moody’s presence and broadens its reach. GCR’s local expertise and established network offer Moody’s a robust foundation to enhance its analytical capabilities and diversify geographic risk. By maintaining GCR's independent rating methodologies and management, Moody’s ensures continuity and local trust, important in emerging markets where localized insights hold substantial value.

In the short term, the acquisition may not dramatically alter Moody’s financial results, as indicated by the disclosure. However, the long-term benefits include enhanced market penetration and revenue growth opportunities from Africa's developing economies. Investors should also note the strategic importance of expanding ESG (Environmental, Social, Governance) capabilities, aligning with global trends favoring sustainable and responsible investing.

While new geographical expansions carry inherent risks, Moody’s established presence and methodical approach mitigate potential pitfalls. Observing how Moody’s integrates GCR’s operations and adapts to regional market dynamics will be key to assessing the success of this acquisition.

Market Research Analyst

Africa's domestic credit market is experiencing rapid growth and Moody’s full acquisition of GCR positions it to capitalize on this trend. For retail investors, understanding that this move can enhance Moody’s market intelligence and product offerings is crucial. GCR’s established operations in multiple African countries provide Moody’s with a comprehensive view of the credit environment across the continent.

The inclusion of GCR’s ESG capabilities is particularly noteworthy. With increasing global emphasis on sustainable investing, Moody’s can offer enhanced services that meet evolving investor demands. The strategic fit is clear: Moody’s gains detailed regional insights, while GCR benefits from Moody’s global reach and resources. This synergy can potentially lead to innovative credit risk solutions tailored for the African market.

Overall, this acquisition highlights Moody’s commitment to expanding in emerging markets, which can diversify revenue streams and reduce dependency on more mature markets. The lack of immediate financial impact suggests a cautious, long-term strategy focused on gradual integration and sustained growth.

NEW YORK--(BUSINESS WIRE)-- Moody’s Corporation (NYSE:MCO) announced today that it has fully acquired Global Credit Rating Company Limited (GCR), a leading domestic credit rating agency with operations spanning Africa. The announcement follows Moody’s 2022 acquisition of a majority stake in GCR, and expands Moody’s investment in Africa’s domestic credit markets.

“GCR provides investors with crucial insights and clarity into Africa’s fast-growing domestic credit markets, which play an important role in economic development throughout the continent,” said Rob Fauber, President and Chief Executive Officer of Moody’s. “Moody’s is excited to deepen our domestic ratings presence in Africa through a trusted name in GCR.”

“The full acquisition of GCR by Moody’s is an important milestone that will enable us to build on our deep local market insights and over a quarter century of growth across the African continent,” said Marc Joffe, Chief Executive of GCR. “It will also provide the opportunity to further develop solutions that meet a range of customer needs, including credit ratings, credit risk solutions, and ESG capabilities.”

GCR rates financial institutions, corporates, public sector issuers, and structured transactions across Africa, and maintains offices in South Africa, Nigeria, Senegal, Kenya, and Mauritius. It will continue to operate as an affiliate of Moody’s – developing its own rating methodologies, issuing its own credit ratings, and maintaining a separate management team.

The terms of the transaction were not disclosed, and it will not have a material impact on Moody’s 2024 financial results.

About Moody’s Corporation

In a world shaped by increasingly interconnected risks, Moody’s (NYSE: MCO) data, insights, and innovative technologies help customers develop a holistic view of their world and unlock opportunities. With a rich history of experience in global markets and a diverse workforce of approximately 15,000 across more than 40 countries, Moody’s gives customers the comprehensive perspective needed to act with confidence and thrive. Learn more at moodys.com.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this document are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. Stockholders and investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements and other information in this document are made as of the date hereof, and Moody’s undertakes no obligation (nor does it intend) to publicly supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise, except as required by applicable law or regulation. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Moody’s is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. These factors, risks and uncertainties include, but are not limited to: the impact of general economic conditions (including significant government debt and deficit levels, and inflation and related monetary policy actions by governments in response to inflation) on worldwide credit markets and on economic activity, including on the volume of mergers and acquisitions, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives and monetary policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other potential impacts of volatility in financial and credit markets; the global impacts of the Russia - Ukraine military conflict and the military conflict in Israel and the surrounding areas on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations and personnel; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, increased utilization of technologies that have the potential to intensify competition and accelerate disruption and disintermediation in the financial services industry, as well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional parties; the level of merger and acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers; the impact of MIS’s withdrawal of its credit ratings on countries or entities within countries and of Moody’s no longer conducting commercial operations in countries where political instability warrants such actions; concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; the introduction or development of competing and/or emerging technologies and products; pricing pressure from competitors and/or customers; the level of success of new product development and global expansion; the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations; the potential for increased competition and regulation in the jurisdictions in which we operate, including the EU; exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which Moody’s may be subject from time to time; provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable to credit rating agencies in a manner adverse to credit rating agencies; provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; uncertainty regarding the future relationship between the U.S. and China; the possible loss of key employees and the impact of the global labor environment; failures or malfunctions of our operations and infrastructure; any vulnerabilities to cyber threats or other cybersecurity concerns; the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program; currency and foreign exchange volatility; the outcome of any review by tax authorities of Moody’s global tax planning initiatives; exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which Moody’s operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; the impact of mergers, acquisitions, such as our acquisition of RMS, or other business combinations and the ability of Moody’s to successfully integrate acquired businesses; the level of future cash flows; the levels of capital investments; and a decline in the demand for credit risk management tools by financial institutions. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31, 2023, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it. Forward-looking and other statements in this document may also address our corporate responsibility progress, plans, and goals (including sustainability and environmental matters), and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in the Company’s filings with the Securities and Exchange Commission. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

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For Moody’s Investor Relations:

Shivani Kak

Moody’s Corporation

+1 212-553-0298

Shivani.Kak@moodys.com

For Moody’s Communications:

Joe Mielenhausen

Moody’s Corporation

+1 212-553-1461

Source: Moody’s Corporation Investor Relations

FAQ

What did Moody’s (NYSE:MCO) announce regarding GCR?

Moody’s announced the full acquisition of Global Credit Rating Company (GCR), expanding its presence in Africa's domestic credit markets.

When did Moody’s acquire a majority stake in GCR?

Moody’s acquired a majority stake in GCR in 2022 before fully acquiring the company.

Who is the CEO of Moody’s?

Rob Fauber is the President and Chief Executive Officer of Moody’s.

Will the acquisition of GCR affect Moody’s 2024 financial results?

No, the acquisition will not have a material impact on Moody’s 2024 financial results.

In which African countries does GCR operate?

GCR operates in South Africa, Nigeria, Senegal, Kenya, and Mauritius.