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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.
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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