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Moody’s blues

01 November 2000

The long-anticipated spin-off of rating agency Moody’s from its parent company was completed on September 30. Launched into a bear market, the first month of trading has been difficult. Louise Bowman assesses whether the strategy of independence will pay off at a time when the demand for airline credit ratings is set to rocket.

Tags: structured finance  |  ATA  |  securitization

The decision to spin off Moody?s was taken last year under intense shareholder pressure and means that Dun & Bradstreet (D&B) is losing its fastest-growing and most profitable business. The sale has significant implications for both firms because Moody?s accounts for 30% of D&B?s total sales. But what does it mean for Moody?s and the rest of the rating agency market?

Established in 1841, D&B was one of the first commercial credit rating agencies. It bought Moody?s in 1962 and pursued an aggressive strategy of growth by acquisition until the early 1990s when the less profitable units were sold. Further reorganization took place in 1993 when D&B reduced its 27 worldwide data centres to four. In 1996, pressure on earnings forced the sale of AC Neilsen and Cognizant, health and media research operations. Further sales took place in 1997 (NCH Promotional Services) and 1998 (RH Donnelley).
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