Moody's Corporation, which operates in two segments, Moody's Investors Service and Moody's Analytics announced last week the next steps in strengthening its divisions.
While the company’s Investors Service branch provides credit ratings, research covering debt instruments and securities, its Analytics sector offers leading-edge software, advisory services, and research for credit and economic analysis and financial risk management. But the announcement of MCO’s acquisition of ABS Suite, a software platform for mortgage-backed securities is set to temper their already dominant position in the industry.
The purchase of this software from Deloitte & Touche LLP brings significant changes. With ABS Suite employees are set to join the Structured Solutions business of Moody’s Analytics. It comes at a time when the credit rating service looks to expand and grow outside these areas. As the company has branched out into the banking and insurance industries, it’s also expanded into enterprise risk solution sectors. Despite the volatility of interest rates, Analytics business shares have continued to rise adding security to Moody’s top-line growth.
“The acquisition of ABS Suite deepens Moody’s Analytics’ presence with issuers of securitized transactions,” said Moody’s Analytics President Mark Almeida. “Adding the expertise and experience of the ABS Suite team to our already formidable capabilities enables us to provide more and better solutions that improve funding decisions, increase operational efficiency and promote transparency and efficiency in the securitization financial markets.”
The company's Analytics division represents more than 35% of its revenues, offering various solutions related to financial and risk-management activities of institutions. ABS Suite’s global customer base boasts five of the top ten auto finance issuers, five of the top eight credit card issuers, as well as a slew of large issuers of mortgage and telecom receivable securitizations. Of course, Moody’s is one of the big three credit rating services.
Notably, this has been part of MCO’s playbook, having grown steadily over the years with similar acquisitions, increasing its sales and cross-selling opportunities across various markets.
While the firms did not disclose the terms of the transaction, they did share that it was funded with cash on hand and will not have any notable impact on the company’s 2019 financial results.