On Friday, Gimme Credit assigned MSCI, a renowned provider of financial data, analytics and indices, a “stable” credit rating and an “outperform” rating for its 3.0% notes due 2033. This start to coverage is driven by MSCI’s significant role in international stock indexes and benchmarking, with approximately US$15 trillion in assets under management benchmarked against its indices.
MSCI’s largest division, the index division, accounts for 57% of total sales and is recognized as a leader in its field. The company’s analytics segment, which accounts for 25% of sales, provides a suite of tools and services for risk management, portfolio management and performance attribution. In addition, the ESG and Climate segment, which accounts for 11% of sales, offers data, ratings and research to help clients incorporate sustainability considerations into their investment strategies.
Despite the recent stock market downturn, with MSCI shares falling 14% after reporting increased customer churn and slowing ESG growth, Gimme Credit analysts highlighted the company’s strong credit metrics. MSCI’s high recurring revenue percentage of 95% and its best-in-class EBITDA margin of 60%, as well as robust free cash flow of 16% of total debt and leverage below 3.0x, were contributing factors. . “stable” credit rating.
The bonds are currently trading at T+142, which is marginally within the crossover index and about 30 basis points above the average triple-B rating. Gimme Credit suggests that an upgrade from Moody’s to investment grade, for which MSCI currently has a positive outlook, could tighten the spread further. The company’s Outperform rating on the 3.0% 2033 T+144 note reflects their positive view of MSCI’s creditworthiness.
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