Moody's Corporation, often referred to as Moody's, is the holding company for
Moody's Investors Service, a credit rating agency, and Moody's Analytics, a
provider of financial analysis software and services.
Moody's was founded by John Moody in 1909 to produce manuals of statistics
related to stocks and bonds and bond ratings. Moody's was acquired by Dun &
Bradstreet in 1962. In 2000, Dun & Bradstreet spun off Moody's Corporation
as a separate company that was listed on the NYSE under MCO. In 2007, Moody's
Corporation was split into two operating divisions, Moody's Investors Service,
the rating agency, and Moody's Analytics, with all of its other
products. History of Moody's
Moody's Corporation traces its history back to two publishing companies
established by John Moody, the inventor of modern bond credit ratings. It was
first published in 1900 by John Moody, nine years before he founded Moody's
Corporation. Initially called Moody's Manual of Industrial and Miscellaneous
Securities, it was later superseded by Moody's Manual of Railroads and
Corporation Securities, then by Moody's Analyses of Investments.
In 1900, Moody published his first market assessment, called Moody's Manual
of Industrial and Miscellaneous Securities, and established John Moody &
Company. The publication provided detailed statistics relating to stocks
and bonds of financial institutions, government agencies, manufacturing,
mining, utilities, and food companies. It experienced early success, selling
out its first print run in its first two months.
By 1903, Moody's Manual was a nationally-recognized publication. The
1907 financial crisis fueled several changes in the markets, including the
creation of the Federal Reserve System. Meanwhile, Moody was forced to sell his
business, due to a shortage of capital. Moody returned in 1909 with a new
publication focused solely on railroad bonds, Analysis of Railroad Investments,
and a new company, Moody's Analyses Publishing Company.
In 1962, Moody's Investors Service was bought by Dun & Bradstreet, a firm
engaged in the related field of credit reporting, although they continued to
operate largely as independent companies. By the late 1990s, Moody's
superior performance compared to its parent company brought investor pressure
to separate the businesses. In December 1999, Dun & Bradstreet announced it
would spin off Moody's Investors Service into a separate publicly traded company.
The spin-off was completed on September 30, 2000.
Moody's Investors Service Moody's Investors Service is the bond
credit rating business of Moody's Corporation, representing the company's
traditional line of business and its historical name. Moody's Investors
Service rates debt securities in several market segments related to public and
commercial securities in the bond market. These include government,
municipal and corporate bonds; managed investments such as money market funds,
fixed-income funds and hedge funds; financial institutions including banks
and non-bank finance companies; and asset classes in structured finance.
Moody's Investors Service's closest competitors are Standard & Poor's and
Fitch Group. Together, they are sometimes referred to as the Big Three
credit rating agencies. Moody's Investors Service and its close
competitors play a key role in global capital markets as a supplementary
credit analysis provider for banks and other financial institutions in
assessing the credit risk of particular securities.
According to Moody's, the purpose of its ratings is to "provide investors with a
simple system of gradation by which future relative creditworthiness of
securities may be gauged". To each of its ratings from Aa through Caa, Moody's
appends numerical modifiers 1, 2 and 3; the lower the number, the higher-end the
rating. Aaa, Ca and C are not modified this way.
Moody's Analytics Moody's Analytics is a subsidiary of
Moody's Corporation established in 2007 to focus on non-rating activities. It
performs economic research related to credit analysis, performance management,
financial modeling, structured analysis and financial risk management. Moody's
Analytics also offers software and consulting services, including
proprietary economic models and software tools, as well as professional training
for the financial services sector, particularly risk management
accreditation. Moody's Analytics started in 1995 as a
business unit providing quantitative analysis services, including credit risk
assessment software and services, called Moody's Risk Management Service, and
grew through partnerships and acquisitions in the late 1990s and
2000s, expanding its client base and capabilities. Acquisitions included KMV,
Economy.com, Wall Street Analytics, Fermat International, Enb Consulting
Ltd., The Institute of Risk Standards and Qualifications and CSI Global
Education Inc. The Moody's Foundation
In 2002, Moody's Corporation created a corporate philanthropy program, The
Moody's Foundation, focused on educational initiatives in mathematics,
economics and finance. The organization offers grants to 501(c)(3) non-profits
and equivalent international organizations, accredited schools and
some governmental organizations. Since 2006, its main program is the
annual Moody's Mega Math Challenge, a student academic challenge co-sponsored
with the Society for Industrial and Applied Mathematics, in which several
hundred teams of high school students use quantitative analysis and modeling
to solve problems related to real-life financial topics such as Social Security
and the Economic Stimulus Act of 2008. Since 2010
Moody's Research Labs Moody's Research Labs, Inc. was a
business incubator focused on research and development specializing in
financial risk modeling and analysis, focused on developing such products for
use by other divisions of Moody's Corporation. Its president was Roger
Stein. In March 2011 Moody's Analytics announced the release of a software
program developed by Moody's Research Labs, the Mortgage Portfolio Analyzer,
to assist portfolio managers in managing credit risk. Moody's Research Labs was
dissolved in February 2012. Lawsuit Settlements
October 2011 - Moody’s reached a settlement resolving claims by the state
of Connecticut that the credit rating company unfairly gave lower ratings to
public bonds. July 2012 - Moody’s said it reached a
settlement with stockholders in lawsuits filed over structured finance ratings.
April 2013 - Moody's reached a settlement avoiding what would have been
their first jury trial over crisis-era ratings. The fourteen plaintiffs, were
led by Abu Dhabi Commercial Bank and King County, Washington. They claimed
lawsuits filed in 2008 and 2009 that Moody's misled them by allegedly
inflating ratings on two so-called structured investment vehicles they
purchased. References
External links Moody's
Moody's Analytics Moody's Research Labs
The Moody's Foundation