Raters Recouping Crisis Losses as S&P, Moody’s Approach Records

Standard & Poor’s parent McGraw Hill Financial Inc. (MHFI) and Moody’s (MCO) Corp. are recouping losses from the worst financial crisis since the Great Depression as shares of the companies flirt with record highs amid surging demand for corporate-debt ratings.

McGraw Hill, owner of the largest credit grader, rose 0.3 percent to $71.32 today, needing to increase 0.9 percent to reach its all-time closing high of $71.96 in June 2007. Moody’s, the second-largest rater, climbed 1.7 percent to $72.42, 3.3 percent away from its end-of-day peak of $74.84 in February 2007. Shares of both companies will surpass those peaks, with McGraw Hill rising to $76.40 and Moody’s climbing to $76.50 in the next 12 months, according to the average estimates of analysts surveyed by Bloomberg.

The credit-ratings firms, both based in New York, have rebounded as companies take advantage of Federal Reserve monetary policies that have funneled more than $3 trillion into the financial system while keeping the central bank’s benchmark lending rate at almost zero since December 2008.

McGraw Hill, which touched an intraday record high of $74.37 on Oct. 24, traded as low as $17.15 in October 2008. Moody’s, which reached an intraday peak of $73.90 on Oct. 22, traded as low as $15.41 in November 2008.

With companies raising a record $4 trillion globally last year, corporate-finance grades made up 33 percent of ratings revenue at Moody’s in the third quarter, up from 16.5 percent at the end of 2008, according to data compiled by Bloomberg. S&P doesn’t break out its ratings segments.

Borrowing costs for the most creditworthy to the riskiest investors have averaged 3.47 percent this year, below the 10-year average of 5.06 percent, according to the Bank of America Merrill Lynch Global Corporate & High Yield index.

To contact the reporter on this story: Matt Robinson in New York at Mrobinson55@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.