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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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