The credit rating industry remains a cornerstone of global financial markets, with Moody’s Corporation (MCO) often regarded as a purer play in this space compared to its closest rival, S&P Global (SPGI). While both firms are titans in assessing creditworthiness, their revenue compositions and strategic focuses reveal distinct approaches to capitalising on market needs. This analysis dives into the structural differences, financial performance, and growth trajectories of these two giants, drawing on the latest available data for 2025.
Revenue Composition: Credit Ratings as the Core
Moody’s Corporation, through its Moody’s Investors Service (MIS) segment, generates a significant portion of its revenue from credit ratings—approximately 60% based on recent analyses of segment breakdowns for Q1 2025 (January to March). This segment focuses on evaluating the creditworthiness of corporates, financial institutions, structured finance, and public entities. By contrast, S&P Global, while also a leader in credit ratings, derives a smaller proportion of its revenue from this activity, with estimates suggesting closer to 40–45% for the same period, owing to its wider portfolio of services including market intelligence and indices.
The disparity in focus is not merely numerical. Moody’s purer emphasis on ratings positions it as a more concentrated bet on the health of debt issuance markets. In Q1 2025, Moody’s reported record revenue of $1.92 billion, an 8% year-on-year increase, though this growth was notably driven by its Analytics segment rather than ratings alone. S&P Global, on the other hand, reported $3.49 billion for the same quarter, up 10.5% year-on-year, reflecting strength across multiple divisions beyond ratings. This broader base may insulate S&P Global from cyclical downturns in bond issuance, a vulnerability Moody’s must navigate with greater care.
Analytics Segments: Divergent Paths to Growth
Beyond ratings, both companies operate analytics divisions, but their approaches differ. Moody’s Analytics (MA) focuses on risk management software, data solutions, and research tools tailored for credit risk assessment, contributing roughly 40% of total revenue in Q1 2025. The segment’s growth trajectory remains positive, with annual recurring revenue (ARR) projected at the lower end of high single-digit to low double-digit growth for fiscal year 2025. S&P Global’s analytics and data services, embedded within divisions like Market Intelligence, are more expansive, covering benchmarks and commodity pricing alongside credit data, and account for a larger share of its diversified revenue stream.
While Moody’s Analytics shows promise, its narrower scope may limit its ability to match the scale of S&P Global’s offerings. Investors seeking exposure to analytics-driven growth might find S&P Global’s broader platform more compelling, whereas Moody’s offers a tighter focus on credit-specific tools. This distinction, while subtle, shapes their respective risk profiles in a market increasingly hungry for data-driven insights.
Financial Performance and Market Positioning
To contextualise their performance, a snapshot of key financial metrics for Q1 2025 is provided below. These figures are sourced from official filings and trusted financial platforms to ensure accuracy.
| Company | Total Revenue (Q1 2025) | Year-on-Year Growth | Credit Ratings Revenue Share |
|---|---|---|---|
| Moody’s Corporation (MCO) | $1.92 billion | 8.0% | ~60% |
| S&P Global (SPGI) | $3.49 billion | 10.5% | ~40–45% |
Moody’s smaller revenue base compared to S&P Global reflects its more focused business model, but it also highlights a potential ceiling on growth if debt issuance slows. S&P Global’s diversified income streams, including its indices business (think S&P 500), provide a buffer against such headwinds. That said, Moody’s stock has traded at a premium valuation in recent quarters, with some market observers—such as those sharing insights on platforms like X—noting a disconnect between its price and growth prospects. Whether this premium is justified remains a point of debate, particularly as analysts project Moody’s earnings per share (EPS) for fiscal year 2025 at $13.55, a modest uptick from prior years.
Strategic Implications and Outlook
Looking ahead, Moody’s concentration on credit ratings could be both a strength and a liability. In an environment of robust debt issuance, its MIS segment stands to gain disproportionately. However, regulatory scrutiny of rating agencies, a lingering concern since the 2008 financial crisis, could weigh on its core business more heavily than on S&P Global, whose revenue is less tied to ratings. Conversely, S&P Global’s broader exposure introduces its own risks, including competition in data and analytics from non-traditional players.
For 2025, market forecasts suggest both firms will face issuance challenges, particularly in structured finance, as interest rates remain elevated. Moody’s Analytics growth, while steady, may not fully offset a ratings slowdown, whereas S&P Global’s indices and intelligence segments are better positioned to capture alternative revenue. Investors must weigh whether Moody’s purer play offers a clearer bet on credit markets or a narrower path to sustained returns.
In conclusion, the structural differences between Moody’s Corporation and S&P Global underscore a fundamental choice for market participants: focus versus diversification. Moody’s dominance in credit ratings provides a direct line to the pulse of debt markets, but S&P Global’s wider net may prove more resilient in uncertain times. As financial markets evolve, the balance between these approaches will likely define their trajectories well beyond 2025.
References
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