S&P Global Ratings Sees Growth and Innovation Post-IHS Markit Merger: BofA Securities Information and Business Services Conference Summary

Two years following the landmark merger between S&P Global Inc. and IHS Markit, Martina Cheung, President of S&P Global Ratings, reflects on the integration's success and future opportunities at the BofA Securities Information and Business Services Conference.

The merger has yielded significant cost savings through reduced shared services and renegotiated third-party licenses. More importantly, it has enhanced the Ratings division's access to high-value data, such as Mobility, Commodity Insights, and fixed income data from Market Intelligence. This integration has not only streamlined internal processes but also bolstered the division's research capabilities, a cornerstone of S&P's value proposition to investors.

Cheung highlighted the synergy between IHS Markit's products and S&P's credit ratings, which has led to increased referrals across S&P Global's divisions. As the President of Ratings, Cheung's priorities align with the company's strategic pillars discussed during Investor Day, focusing on expanding the core Ratings business, enhancing non-transaction services, and addressing new risks, including sustainability and decentralized finance.

S&P Global Ratings has seen growth in structured finance and has capitalized on the opportunity to align surveillance fees with the added value provided to issuers. The acquisition of Shades of Green has positioned S&P as a leader in the Sustainable Prepared Opinions (SPO) market, and the launch of a Stablecoin Stability Assessment has marked S&P's entry into the decentralized finance space.

Despite the complexities of the current issuance environment, Cheung remains optimistic. Key drivers include refinancing maturities, macroeconomic factors, and specific asset class activities. The anticipation of interest rate cuts and the resulting market stability have already spurred issuance activity, as evidenced by a 66% increase in billed issuance in January.

S&P's cautious guidance for the year reflects a balanced view of potential growth areas and uncertainties, such as investment-grade issuance and M&A activity. Cheung believes that long-term issuance trends are returning to pre-COVID levels, with S&P's billed issuance providing a more accurate reflection of revenue-related activities.

The conversation also touched on the burgeoning private credit market, which has become a growth opportunity for S&P rather than a secular headwind. The company's strategic approach to private markets has yielded positive results, with increased outreach to sponsors and a focus on fund ratings and structured finance.

Lastly, Cheung discussed the potential of generative AI and Kensho's role in driving efficiency and innovation within S&P Global Ratings. Sustainable1, the division Cheung leads, aims to integrate ESG products across the organization, capitalizing on the diverse assets within S&P Global.

The recent SEC ruling on climate-related disclosures for publicly traded companies is seen as an opportunity for S&P, which already offers products to assist companies with such reporting requirements.

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