Morning, thanks to everyone for joining today's call. I'm going to begin by providing a general update on the business, including Moody's Q2 2021 financial results. Following my commentary, Mark Kaye will provide further details on our Q2 2021 performance, as well as our revised 2021 outlook. After our prepared remarks, as always, we'll be happy to take your questions. Moody's delivered strong financial results in Q2 2021. Revenue growth of 8% and an increase in adjusted diluted EPS of 15% highlighted the robust demand for our best-in-class integrated risk assessment offerings. Favorable market conditions and heightened M&A activity provided the backdrop for sustained leverage finance issuance in Q2, and it supported growth in our ratings business. The ongoing expansion of our risk assessment solutions, combined with strong retention rates, drove MA's significant recurring revenue growth. Top-line performance as well as expense discipline contributed to adjusted operating margin expansion, and our cost efficiency initiatives continue to fund key investments in product innovation that should support ongoing growth. As a result of our solid execution in the quarter, we've revised our full year 2021 guidance and now forecast Moody's revenue to grow in the low- double-digit percent range. Additionally, we've raised our adjusted diluted EPS guidance to be in the range of $11.55-$11.85. Now turning to second quarter results, MIS revenue grew 4%. That's despite the tough prior- year comparable, while MA achieved its highest- ever quarterly revenue, up 15% from last year. On an organic constant- currency basis, MA revenue increased 8%. Moody's adjusted operating income rose 12% to $861 million, and the adjusted operating margin expanded 200 basis points to 55.4%. Adjusted diluted EPS was $3.22, up 15%. On the last earnings call, I highlighted that issuance volumes reached their highest level in over a decade. This quarter, as anticipated, investment-grade activity declined as many issuers had already substantially fulfilled their funding needs in recent quarters. Although overall issuance declined by 16%, as you can see on the chart, second quarter issuance was still well above the historical 10-year average, as shown on the blue line. While the growth in leveraged loans outpaced high-yield bonds, the demand that we saw earlier this year from both asset classes persisted, albeit a bit slower sequentially. We also saw increased momentum in the CLO market driven by opportunistic refinancing as spreads remained tight. We frequently comment on our revenue relative to issuance levels, which relates to issuance mix. In the second quarter, transactional MIS revenue grew 3%, while MIS-rated issuance declined 16%. This chart provides an illustration of our second quarter issuance and revenue mix by asset class. For example, the dark green bubble on the bottom left corner represents investment-grade issuance. You can see that issuance was down 68% in the second quarter versus the prior year. However, leveraged loans, which has a greater proportion of issuers on per issuance or pay-as-you-go commercial programs, represented by the dark blue bubble on the far right, saw issuance up over 200%. That significantly contributed to this quarter's favorable issuance mix. Similar to last quarter, favorable market conditions led issuers to access the debt markets for a variety of reasons. Credit spreads tightened as default rates trended lower, keeping the overall cost of debt low and allowing issuers to opportunistically refinance existing debt. As economies started to recover and equity markets continued their strong run, we saw an acceleration of M&A as companies used a combination of cash balances and debt financing to acquire growth and position businesses for the post-pandemic economy. We expect this constructive environment to persist, providing issuers further opportunities to tap the markets. That said, we forecast activity for the remainder of 2021 to moderate from historical highs that we saw in the first half of this year. Mark Kaye's going to go into further detail on our issuance guidance by asset class later in the call. Let's turn to Moody's Analytics. Moody's Analytics's growing recurring revenue base and strong retention rates demonstrate the market demand for our products. Our emphasis on renewable sales has increased the proportion of recurring revenue by 4 percentage points in the trailing 12-month period to 92%. We continue to see significant opportunities in Know Your Customer and financial crime compliance solutions, as well as areas like insurance and asset management, both of which contributed to recurring revenue growth along with research and data feeds. I want to further spotlight these two high-growth areas. I'll start by highlighting a few key trends in the KYC market. First, as I've mentioned before, the pandemic has accelerated digital transformation in Know Your Customer and customer onboarding. Second, regulators are requiring organizations to know more about their customers and suppliers than ever before. Finally, financial crime continues to become more sophisticated, which requires advanced detection and monitoring capabilities. Our industry-leading product offerings and solutions leverage information on hundreds of millions of entities and ownership structures, as well as detailed profiles on over 13 million politically exposed individuals. Using artificial intelligence, we combine our world-class datasets to map and analyze adverse media, together generating insights and identifying risks at a scale, speed, and precision that is difficult for others to match. Creating a compelling solution that is unique to Moody's and enables our customers to make better and faster decisions to combat financial crime. Similar to our Know Your Customer and financial crime compliance products, our expanding offerings for insurers and asset managers are contributing to revenue growth for MA and are a core part of our integrated risk assessment strategy. We initially entered the insurance customer segment by providing market-leading regulatory compliance software. We moved into actuarial models to support global life insurers enabled by our acquisition of GGY. We further expanded our capabilities to include asset and liability management and balance sheet solutions, portfolio analytics, and other tools to help address new accounting standards such as IFRS 17 and CECL. The data, analytics, and domain expertise from across our business enables us to provide insurers and asset managers with more comprehensive solutions to manage a wider set of risks. As the industry continues to evolve, our holistic approach allows us to build on our existing position in the insurance space, while at the same time provide a broader range of increasingly important analytics and insights, such as climate risk scenarios. Together, this has contributed to our ability to deliver 20% organic revenue growth over the trailing 12 months in this segment. We're excited about the opportunity ahead to serve new and growing risk assessment use cases for insurers and asset managers, leveraging our vast data sets and analytic capabilities. I've also talked a number of times about the importance of innovating and integrating our data and analytics across our product suite. For example, this quarter, we launched an industry-first ESG Score Predictor. This offering combines Moody's ESG scoring methodology with company-specific data and predictive analytics to produce ESG scores for over 140 million small and medium-sized enterprises. These scores allow our customers to screen ESG risks on public and private companies to monitor portfolio and supply chain risk, are a great example of integrating our SME and ESG capabilities to address a key market need, which is ESG assessment to support sustainable supply chains. Staying on ESG for a moment, there's been a proliferation of climate-related financial disclosures over the past few years, we recently partnered with the TCFD to provide insight on the quality of climate disclosures, leveraging our natural language processing and machine learning tools. In MIS, we expanded our proprietary ESG Credit Impact Score coverage to companies in a broader range of industries, as well as to U.S. states and cities. We believe this is a unique offering that will allow investors to understand more clearly the impact of ESG on any issuer's creditworthiness and enhances our credit ratings relevance and thought leadership. In Moody's Analytics, as a leading provider of KYC data and analytics, our customers are increasingly needing to comply with regulations relating to modern slavery and human trafficking within their supply chain. Working with various stakeholders, we added new AI-enabled features to help our customers screen and track previously undetected instances of human trafficking and modern slavery risk across their supplier base, providing an opportunity to further broaden our KYC customer base beyond financial institutions. I'm frequently asked how we are differentiating ourselves in the ESG space, I thought I would take a minute to provide a few customer case studies that illustrate how we're combining our capabilities to meet the risk assessment needs of different customer types. In the Americas, we worked with a leading global commercial real estate firm to embed physical climate risk analysis into their global funds and client portfolios. The detail and rigor of our climate scores and data on individual properties allowed them to analyze thousands of properties in a more sophisticated and a more efficient way. In Europe, a large government agency requested our expertise on their green bond financing framework. Through our second-party opinion, we assessed that the proposed framework not only aligned with their climate and environmental agenda, but also with the 2021 Green Bond Principles. Since 2012, we've provided hundreds of second-party opinions across 30 countries with over 60 second-party opinions provided just in the first half of this year. On to Asia. A large regional bank, also an existing MA customer, recently selected Moody's to create a robust framework to quantify the ESG and climate risk of customers' portfolios, leveraging our ESG assessments, ESG and climate insights and data, and our ESG Score Predictor that I just talked about. They also requested in-house training on how to integrate ESG and sustainability into their in-house risk management practices. It's a really great example of commercializing ESG and climate across our risk assessment offerings and our customer base. Before I turn it over to Mark, I also want to highlight a few examples of industry recognition that Moody's has received through the first half of this year. These matter because they are independent third-party validation about the strength of our offerings across the firm. MIS was named Best Credit Rating Agency in multiple areas in the GlobalCapital Bond Awards and the Best Global Credit Rating Agency by Institutional Investor, again. MIS was also ranked the number one Securitization Rating Agency of the Year in the GlobalCapital European Securitization Awards. As I noted, within MA, we are investing in our products to help our customers make better decisions on a wider range of risks. Industry participants recognize the pace of our innovation. Awarding MA's Credit Sentiment Score the best AI-based solution in the 2021 AI Breakthrough Awards. I'm pleased that we ranked number two on Chartis STORM QuantTech50, demonstrating our position at the forefront of digital transformation in our sector. Moody's ESG Solutions also won the Climate Risk Solution of the Year in Environmental Finance's Sustainable Investment Awards. I'm also enormously proud that Moody's was named a top 50 company for diversity by DiversityInc. Together, these recognitions underscore our commitments to customer delivery, innovation, sustainability, and diversity, equity, and inclusion, all of which are critical to our sustained success. Finally, I'm thrilled that Moody's joined the Fortune 500 earlier this quarter. This milestone is a testament to the dedication our employees have shown, both to our customers and to one another. On behalf of the executive team, I would like to thank all of our employees for their ongoing efforts, which contribute to these great recognitions. With that, I'll now turn the call over to Mark to provide further details on Moody's second quarter results, as well as an update to our outlook for 2021. Thank you, Rob. In the second quarter, MIS revenue increased 4%, supported by a 3% rise in transaction revenue, while global MIS-rated issuance declined 16%. As a result of favorable mix, corporate finance revenue declined 4% versus a 26% decrease in issuance. This was attributable to a surge in leveraged finance activity as U.S. and EMEA issuers opportunistically refinanced existing debt and funded M&A transactions. Investment-grade supply contracted compared to the prior-year period, which had seen significant liquidity-driven financing caused by uncertainty over the unfolding pandemic. Financial institutions revenue rose 6%, above the 1% increase in issuance. This is due to infrequent EMEA bank issuers who sought to take advantage of the ongoing attractive rate environment. Revenue from public project and infrastructure finance declined 2% compared to a 45% decrease in issuance, as increased non-U.S. project and infrastructure activity was offset by a reduction in U.S. infrastructure supply. Structured finance revenue increased 73%, supported by an over 200% growth in issuance. This is due to approximately 200 CLO deals this quarter, our highest on record, predominantly attributable to refinancing activity. In addition, CMBS formation further bolstered overall results. MIS's adjusted operating margin expanded 230 basis points to 66.3%. This was enabled by strong revenue growth, coupled with operating efficiency initiatives and lower legal accruals, partially offset by higher reserves for 2021 incentive compensation. Moving to MA, second quarter revenue rose 15%, or 13% on an organic basis. In RD&A, revenue increased 19%, or 16% on an organic basis. This is due to robust demand for KYC and compliance solutions, as well as strong customer retention rates and double-digit trailing 12-month sales growth in research and data feeds. For ERS, recurring revenue rose 16%, driving overall ERS growth of 5%, or 3% organically. This reflected the demand for our insurance and asset management offerings, tools supporting upcoming accounting standards implementations, such as IFRS 17, as well as our SaaS-based credit assessment and origination solutions. Additionally, ERS's recurring revenue comprised 88% of second quarter revenue, up eight percentage points from the prior-year period. MA's adjusted operating margin expanded 310 basis points to 31.8%. This reflected the benefits of our recently completed restructuring program, which led to the realization of incremental operating leverage in the quarter. Turning to Moody's full-year 2021 guidance. Moody's outlook for 2021 is based on assumptions regarding many geopolitical conditions, macroeconomic, and capital market factors. These include, but are not limited to, the impact of the COVID-19 pandemic, responses by governments, regulators, businesses, and individuals, as well as the effects on interest rates, foreign currency exchange rates, capital markets liquidity, and activity in different sectors of the debt market. The outlook also reflects assumptions regarding general economic conditions, the company's own operations and personnel, as well as additional items detailed in the earnings release. Our full-year 2021 guidance is underpinned by the following macro assumptions. A rise in the 2021 U.S. and euro area GDP to a range of 6%-7% and 4%-5%, respectively. Benchmark interest rates will remain low, with U.S. high- yield spreads remaining below approximately 500 basis points. The U.S. unemployment rate will decline to under 5% by year-end, and the global high- yield default rate will fall below 2% by year-end. Our guidance also assumes foreign currency translation and end-of-quarter exchange rates. Specifically, our forecast for the balance of 2021 reflects U.S. exchange rates for the British pound of $1.38 and $1.19 for the euro. These assumptions are subject to uncertainty, and results for the year could differ materially from our current outlook. Following our better-than-anticipated second quarter results, we are raising our full-year 2021 guidance across several metrics. We now forecast Moody's revenue to grow in the low double-digit percent range. We maintain our expectation for expenses to increase in the mid-single digit percent range as we balance reinvesting the benefits from our cost efficiency programs against the opportunity for future growth-oriented investments. Given our improved revenue outlook and expense stability, we now project Moody's adjusted operating margin to be approximately 51%. We raised the diluted and adjusted diluted EPS guidance ranges to $10.95-$11.25, and $11.55-$11.85 respectively. We increased our free cash flow forecast to be between $2.2 billion and $2.3 billion. We anticipate full-year share repurchases to remain at approximately $1.5 billion, subject to available cash, market conditions, and other ongoing capital allocation. On prior earnings calls, Rob has detailed our integrated risk assessment strategy, of which investments and acquisitions will play an important role. To that end, we are focused on M&A opportunities in our addressable markets that will advance our strategy. As always, we don't comment on any specific potential acquisitions or divestitures, and we won't comment on any deals that we are pursuing. We have not included the impact of any future acquisitions in our current outlook, but obviously a transaction could affect our guidance depending on the terms of any deals that we are able to reach. Under our long-held capital allocation policy, we prioritize organic and inorganic investments into the business before returning any excess cash via share repurchases. For a complete list of our guidance, please refer to Table 12 of our earnings release. Within MIS, following a strong second quarter, we now project aggregate global rated issuance to grow in the low single-digit percent range, up from our previous guidance of a low single-digit percent decline. We would like to reiterate that our guidance, similar to last quarter, does not factor in any potential impacts from the U.S. infrastructure bill proposals. We are raising our issuance forecast for leverage loans to be up approximately 75% and for high-yield bonds to be up approximately 25%. These are meaningful increases compared to our prior outlook of up 55% and approximately flat respectively, is the result of better than expected second quarter issuance, as well as ongoing favorable refinancing conditions and heightened M&A activity. We expect that the increase in leverage loan supply will continue to drive CLO creation and are therefore also improving the structured issuance outlook to be up approximately 75%. Following a very active 2020, full-year investment grade supply is now forecast to decrease by approximately 40%. That's slightly lower than our previous guidance, which anticipated volumes to decline 30%. After a surge in activity in the second quarter, we are increasing our guidance for new mandates to be in the range of 950-1,050. While we believe favorable market conditions will persist, we forecast issuance to moderate in the second half of the year to more of a historic sawtooth pattern, as we believe many issuers will fulfill the majority of their funding needs early in the year, and that liquidity-driven issuance will return to pre-pandemic levels. With our improved issuance outlook, we now estimate that MIS' revenue will increase in the high- single-digit percent range. MIS' adjusted operating margin guidance remains at approximately 61%, as our improved top-line outlook is partially offset by higher incentive compensation accruals and an acceleration in ESG technology and automation investments in the second half of the year. For MA, we are maintaining our low double-digit revenue growth guidance, supported by our high- single-digit constant dollar organic growth given robust demand for our renewable products and stable customer retention rates, favorable movements in foreign exchange rates, and tailwinds from a recent acquisition. We are raising MA's adjusted operating margin guidance to be in the range of 30%-31% as we continue to effectively manage our expense base while accelerating strategic investment back into the business. As I mentioned previously, we are reaffirming our full-year 2021 expense guidance to increase in the mid-single digit percent range. Although we expect higher incentive compensation accruals associated with our improved revenue outlook, many of our cost efficiency initiatives and organic investment assumptions remain in line with our prior update. This enables us to both fund our strategic priorities and reinvest back into the business. Finally, we want to reiterate that our spending for key organic investments will be heavily weighted towards the second half of the year. Before turning the call back over to Rob, I'd like to highlight a few key takeaways. First, we successfully executed our strategic and business objectives, delivering strong results again this quarter. Second, several areas of MA, specifically KYC and compliance, research and data feed, as well as insurance and asset management, provided momentum for recurring revenue growth. Third, we continue to integrate and embed our holistic E, S, and G offerings within our products and solutions, enabling our stakeholders to manage an evolving set of risks. Fourth, our culture of continuous expense discipline enabled us to purposely reinvest back into the business. Finally, following robust first half performance and the ongoing global economic recovery, we are pleased to be able to upwardly revise our 2021 financial outlook. With that, let me turn the call back over to Rob. Thanks, Mark. This concludes our prepared remarks, and Mark and I would be pleased to take your questions. Operator? Thank you. If you would like to ask a question, please dial star one on your telephone keypad. If you are on a speakerphone, please pick up your handset and make sure your mute function is turned off so that your signal reaches our equipment. We will ask that you please limit yourself to one question with a brief follow-up. You are welcome to rejoin the queue for any additional questions you may have. Again, that is star one to ask a question. We'll go ahead and take our first question from Manav Patnaik with Barclays. Please go ahead. Thank you. Good morning. I guess I was just curious, in terms of all the moving pieces around issuance, if you could help us with what the cadence looks like. I know you said second half would moderate. Are you assuming that Q3 continues kind of the run we've seen in Q2, and then Q4 is kind of the big, I guess we'll see what happens quarter? I was hoping any color there based on what you're seeing would be helpful. Yeah, Manav. Good to have you on the call. We're now looking at low single-digit growth in global rated issuance, obviously that's an improvement from our outlook for low single-digit decline earlier this year. That really is driven primarily by our improved outlook for leveraged finance and CLOs, we have an expectation for those sectors to remain active in the second half. Year to date, global issuance has grown at something like 2% versus the prior year period. While issuance conditions we expect to remain favorable, our outlook for the second half of the year assumes moderating issuance and leverage finance in the second half, we just had a torrid pace of issuance in the first half. We're looking for issuance to be roughly flattish to slightly down for the second half of the year versus up just modestly for the first half of the year. You don't necessarily provide specific full costs by quarter, but the general idea is really for MIS revenue to be slightly down in Q3 and slightly up in Q4, and that would be consistent with the historical issuance sort of patterns that we've seen. That's very helpful, Mark. Thank you. Maybe if I could just follow up. Mark, I think last quarter you gave us some numbers that I don't recollect, but I was just hoping, obviously there's a lot of ESG activity going on. You guys have released a lot of new products and initiatives. Can you just remind us of what the run rates of ESG revenues are and how we should think about what you're targeting there? Absolutely. Second quarter ESG revenues were up just shy of 30% compared to the same period last year. That reflects growth both on a standalone basis and also how we're integrating our ESG risk metrics and analytics into our MIS and MA products. For the full year, we're looking for roughly $21 million on a standalone basis, and then another $5 million-$10 million from integration into the two business segments. I also thought I'd just spend a minute on some of the commercial and product achievements this quarter on ESG, because I think they're definitely worth highlighting. First, on the commercial side, we saw very strong quarterly growth in climate, primarily in bank stress testing and physical climate risk assessments for commercial real estate, corporate facility, and infrastructure clients. We also saw very strong market demand for SPOs, and specifically for our SPO product, which has allowed us to drive success in that sustainable finance area. Lastly, we've introduced on the commercial side a number of new taxonomy offerings, which again are really enabling us to gain traction and have really supported some of the key wins we had in Q2. On the product side, a couple of really interesting new products to the market. The first is we launched the regulatory data solution, which has the SFDR principal adverse indicators, and that's really important because it's going to help investors with reporting obligations under the new EU Sustainable Finance Disclosure Regulation. We've also introduced a climate-adjusted EDF, and that allows us to integrate directly climate scenarios, which are based on the network for the greening of the financial system into our banking and other EDF models. Third is really the one that Rob spoke about earlier on the SME predictor score. This is something we're particularly proud of. We think it's a tool that's the first of its kind. It gives us a competitive edge, and most importantly, it really allows customers to access more than 140 million ESG scores, which are then integrated into our existing Moody's product, like Orbis, like Compliance Catalyst. Yeah, Manav, it's still relatively early days for us in ESG, but as you get a sense from Mark's comments, there's a lot of investment and a lot of product development going on. Makes sense. Thank you. All right. We'll go ahead and take our next question from Kevin McVeigh with Credit Suisse. Please go ahead. Great. Thanks so much. Let me add my congratulations as well. Hey, there's obviously a fair amount of cash that's been accumulating on the balance sheet. I know that's a high-class problem. Any thoughts, Mark or Rob, as to kind of capital allocation just given where the current cash balance sits? Absolutely. First and foremost, our priority when managing the balance sheet is really to ensure the business has the capital necessary to grow and the flexibility to operate effectively. Beyond that, we're going to seek to deploy the cash on our balance sheet consistent with our long-held capital allocation policy. First, reinvesting in our business organically and then seeking appropriate M&A targets after that. Ultimately returning capital to shareholders by way of dividend and then share repurchases. We do have a very strong corporate development team, and we look at a lot of M&A opportunities, though historically we've executed very selectively, and we'll continue to do that, and that's demonstrated by our track record. That said, we do have some interesting larger bolt-on M&A opportunities both in our addressable markets and consistent with our prior M&A approach. They would fit well with our industrial logic and could meaningfully accelerate our integrated risk assessment strategy by bringing in new capabilities or by enhancing our current offerings and initiatives. Our outlook doesn't specifically include the impact of any future acquisitions. To the extent we commit spending to and are actually able to action an M&A deal, we would assess the need to update our plans for returning capital through share repurchases at that time. Super helpful. Then just a quick follow-up. Given how much success you've had on the ESG side, and just the incremental market, are you investing enough, fast enough? Just any thoughts around that, given the amount of kind of strategic initiatives that are out there today? Yeah, Kevin, this is Rob. Hey, Rob. How are you doing? Good to have you on the call. I do think we're investing enough and fast enough. As I said, Mark's comments about the new products that we've been rolling out give you a sense of the breadth of product development going on, and we've got integration going on across really every part of the business. We're very focused on investing to meet the needs of our entire customer base around ESG and climate. I would simply add to that, we should expect to see an acceleration in expense incurrence really in the second half of the year. As we pick up the pace of organic strategic investment, you'll see a rather large increase in third quarter vs fourth quarter related to expenses to support those activities. Thanks so much. All right, we'll go ahead and take our next question from George Tong with Goldman Sachs. George, please go ahead. Hi. Thanks. Good morning. You mentioned that you now expect low single-digit growth in global issuance versus your prior forecast of a low single-digit decline this year. How has your outlook specifically for the second half of that issuance changed over the past quarter? In other words, does the updated outlook reflect just flow-through of Q1 outperformance, or has your outlook for the second half also improved? I'll start, George, really just from an EPS perspective, and then certainly we can go further into this in more detail. Really the primary driver of our increase in full-year 2021 adjusted EPS to sort of $11.70 at the midpoint of the latest guidance range is really the reflection of the actual and expected strong operating performance of MIS of 4% in the second quarter against what we thought is a very difficult prior comparable. We have increased our EPS outlook versus the first quarter full cost by 4 to 5 percentage points really to reflect that. If I look specifically at the year-to-go 2021 adjusted EPS versus the prior year period, the guidance that we provided implies that will be down in the low single-digit percent range, and that's really due to three factors. I'd say, the approximately flat implied MIS revenue outlook for the second half of the year. We can talk more about the comps going forward if you would like. Secondly, is the acceleration of the strategic investments that we have into the second half of the year. Thirdly, just a small M&A hangover of maybe 1% or so there. Yeah, the other thing I would add is just given what we've seen with the leveraged finance markets in the first half of the year, I think that's where you've seen our outlook for the second half of the year. We've carried some of that strength through and seen an improvement versus what we had projected earlier in the year. Got it. That's super helpful color. Just a quick follow-up focusing maybe on MA. Certainly strong performance there. Can you dive a little bit deeper into what's enabling success and growth there, and where you're investing, and if you believe you're investing enough to sustain the growth that we've been seeing in MA? Yeah, sure. MA has demonstrated a very strong track record for delivering kind of high single-digit organic revenue growth. On these calls, we've been talking about some of the areas that are driving that. Know Your Customer, obviously 1. The recurring revenue growth that we're seeing in our Enterprise Risk Solutions, kind of risk-as-a-service business. Also in our core MIS research and data feeds business, as well as our private company data solutions. Just kind of touching on each of these a little bit to give you a sense of the nature of the demand and what's driving the growth. We've talked about KYC and compliance. There's this demand for greater precision and automation of customer vetting. We've got this emerging demand for understanding supply chain resiliency alongside that. All of that is we talked about in the webcast deck driving kind of mid-20s growth in that KYC space. Credit research and data feeds, we have some very high retention rates for that credit research. Lots of demand for the data feeds. I think that just reinforces the critical nature of that content when we're in times of market stress and uncertainty. The other thing I called out on my opening remarks, inside of ERS, you've got areas like insurance and asset management, and we thought it was worth calling out this quarter. Not only have we got ongoing demand for the IFRS 17 solutions, but increasing penetration of the buy side. This is defined benefit pension plans in the risk technology and portfolio design space, and that was really enabled by our acquisition of RiskFirst. All this is coming together and helping to drive some very good growth rates in that space. We've got a very active product development pipeline across all of MA, and we expect we're going to continue to have opportunities to fill in product gaps and extend our capabilities to support ongoing growth. Very helpful. Thank you. All right. We'll take our next question from Toni Kaplan with Morgan Stanley. Please go ahead. Thank you. I wanted to ask about the ERS business. We've had about three straight quarters of low single-digit growth, I know a lot of this is related to lower one-time sales, I guess, when does that fully get worked through? When you look at next year and beyond, what's a normal baseline growth rate for this business? Yep. Toni, good to have you on the call. The key figure this quarter for ERS is the recurring revenue growth rate. That represented about 88% of total ERS revenue in the quarter. That's why we're so focused on that number. Recurring revenue in ERS was up 15% on an as-reported basis, and something like 9% on an organic constant dollar basis. Looking at the drivers of that recurring revenue growth, we had double-digit recurring revenue growth in both insurance and our risk and finance solutions. I talked a bit just a minute ago about what's driving our growth in the insurance space. In risk and finance solutions, we've seen customers continuing to leverage a range of different offerings. We've got products, RiskCalc, RiskFrontier, all to support credit loss reporting requirements and asset and liability and balance sheet management. Our recent acquisition of ZM Financial enhanced that. Toni, you're right. 15% recurring revenue, but overall revenue growth was 5% in the quarter. That 15% recurring revenue growth was dampened by an almost 40% contraction in one-time business at ERS. To the last part of your question, in regards to one-time revenue, we've got increasing customer preference for SaaS solutions. That's naturally going to lead to a continued decline in our one-time revenue for the foreseeable future. That said, I would expect that the rate of decline for one-time revenue will decelerate in 2022 and eventually level off at some relatively de minimis level for our ERS business overall. We will still have some customers who want on-prem solutions, and we may decide to service that, but I think you're going to see that decline decelerate and then level off sometime next year. Maybe, Toni, just to add a couple of numbers around that. Think about the one-time revenue, at least for 2021, for both RD&A and the ERS lines of business as being around $20 million a quarter. Very helpful. Tim, I wanted to turn to my favorite topic, MIS margins. Slide 22 is really helpful with the bridge for the overall versus the prior guide and from last year's expenses. When I look at it, first half MIS adjusted operating margins were 67%. You're guiding to, I think, 61% for the year. That implies 53% margins in the back half. This is obviously way below last year's margins, and last year included some non-recurring items like severance and some extra incentive comp, and I know you're building in more incentive comp in second half. Just how should we think about pacing of investment spend? How much of this is conservatism? Just what are the pieces there? Sure. Good morning. Our updated guidance for the full year 2021 MIS adjusted operating margin to your point is approximately 61%, and that is 130 basis points higher than the actual 2020 adjusted operating margin of 59.7%. That is in addition to the MIS margin expanding by another 170 basis points in 2020. In the first quarter, we spoke about the primary drivers of our MIS margin, and what we're seeing in Q2, which we're partly flowing through to our full-year outlook, is again an increase in operating leverage above a normalized run rate. That's driven by better-than-expected issuance volumes and mix. It's underpinned by the expense discipline that you're observing. It's important to keep in mind that we are planning to deploy part of that operating leverage really towards strategic investments in the second half to advance ESG capabilities, our technology stack. It's really for the benefit of our customers to do that. We expect those actions really will bring down the third and fourth quarter MIS margin two points below the 61% that we're guiding to for the full year. It's also worth just finally noting that MIS is carrying additional incentive compensation accruals associated with the better than expected issuance that will reset in 2022. If we think about combining some of the one-time costs and incentive comp, the key point that I'm making here is that the go-forward expense run rate for 2022 is going to look a lot more like the first half of this year than necessarily what we might see in the second half of this year. Thank you. All right. We'll take our next question from Alex Kramm with UBS. Please go ahead. Hey. Hello, everyone. Just coming back to the issuance MIS outlook, I kind of want to ask a little bit more holistically. I think if you put the last 12 months into context, I think everybody on this call, including you guys and myself, to be honest, of course, was obviously grossly wrong by a wide margin in terms of how the environment played out, right? I think things have definitely been a lot better than everybody had thought. I'm just curious from your perspective as a manager, what would you isolate as the biggest factors that have driven that upside? When you think about the next 12, 24 months, how do you feel about that? How do you think that outlook has changed? Do you feel much less confident now that some of these upside drivers that you've seen can continue to play out? If so, which ones would they be? Hey, Alex. It's Rob. Maybe let me talk a little bit about how we think about kind of the upside and downside to issuance. You're right, it's been quite challenging to forecast for all of us. I might also touch on this question around pull- forward because I think there's a bit of that at play, and it gets into how we start to think about the outlook on a go-forward basis. Obviously we've seen very strong activity in leveraged finance, and I think that's also part of a key in terms of how we're thinking about the second half of the year in terms of the issuance outlook. We've anticipated that there is some moderating of leveraged finance issuance in the second half of the year, as I said earlier, from the very, very strong levels we've seen in the first half. If post Labor Day, we see financing costs and market conditions where they are now, and a continuation of the kind of issuance that we have seen for the last few months, particularly in leveraged loans, that could present some upside. Infrastructure, and I understand there may be some breaking news around potential agreement or bipartisan agreement around an infrastructure bill. I think it may have some impact in 2021, but more likely to have a positive impact to issuance in 2022. As I kind of think about the downside, and I was certainly hoping we were done with this topic, but any escalation of impact from another wave of infections or restrictions due to the Delta variant, I have to note we've got a potentially challenging comparable for the second half of the year. We had a very strong third quarter last year as spreads had tightened. That even continued into the fourth quarter, and we had a pretty strong end to the year. Any increase in equity market volatility, leveraged finance activity is often correlated to equity market conditions and equity market volatility. That's something we're going to watch. Of course, any market disruptions due to an unanticipated trajectory of inflation or interest rates. Okay. Great. Then maybe just shifting gears here quickly. I'm curious about some of the proactive M&A comments here you've made, in particular the comment around larger bolt-ons. Would love you to define some of that a little bit more. With BVD, I think you did the largest deal in history, but when you talk about larger bolt-ons, can you dimensionalize how big something like this could be and what capacity you have? Then maybe related to that, it'd be great if you can just remind us what you're looking for in terms of growthiness of some of these companies. You've done a great job doing some of these smaller deals and really accelerated them. If you're talking about larger bolt-ons, is this something that also needs to accelerate the top-line growth, or is a lot of accretion something that you care about? Maybe just remind us. You have an M&A history yourself, right? What do you look for financially? Yeah. Alex, maybe I'll first kind of clarify what I think of, and I think what Mark means when we say larger bolt-on. I think of our acquisitions of RDC and Bureau van Dijk as a range of larger bolt-on deals. I know we've got a number of questions about M&A over the last couple quarters on these calls, and certainly I refer everybody back to that. I'm going to come back to we're very focused on M&A opportunities in our addressable markets that are what I call on strategy, and that are going to advance our risk assessment capabilities to better serve our customers' evolving needs. You've seen us make acquisitions of high-value data and analytics that are critical to customer workflows and risk processes. That's why they end up having such high retention rates. We've been pretty clear about the areas where we're investing in building scale businesses. That is KYC and financial crime, where I think we've already made some very significant investments, and as a result, have a very strong position in that market. Private company data, CRE, data and analytics, commercial real estate is an area that we've talked about on and off over these calls and we see a large end market and demand from our customers. Of course, ESG and climate. Climate in particular. Climate is an area where there's a lot of near-term demand to understand the physical risk related to climate change from our customers. Within our ERS business, there are some further opportunities to continue to build out a more comprehensive offering for banks and expanding our offerings for insurance companies. You saw us do that with a very small acquisition of ZM Financial. We're doing that both organically and inorganically, and building on both our existing customer base and growth in this space. Hopefully that gives you some color. I'd like just to the second part of your question from a capacity perspective, we are continuing to anchor our capital allocation and cash positioning policies really around that BBB+ rating. To give you a feel, our own lease calculation puts our net debt as of the end of the quarter at roughly $3.4 billion-$3.5 billion against a trailing 12-month adjusted operating income of around $3 billion. We're looking at roughly at 1.1x, at this point. All right. Very good. Thanks, guys. We'll take our next question from Owen Lau with Oppenheimer. Please go ahead. Thank you for taking my question. Could you please give us an update on the strategy and outlook of your business in China? There are some news recently coming out from China. Could you please talk about if there's any potential impact that could change Moody's view on China, if there's any? Thank you. Owen, hey, it's Rob. Good to have you on the call. I think Mark and I will talk about a few of the developments that are going on in China. One of them I think you may be referring to is the data security law. I guess I would first say just as an integrated risk assessment business, policy developments including those on data security are very important factors that we consider for China and elsewhere for that matters. The impact both for Moody's and our customers. For just a little background for everybody on the call, China passed a new data security law in early June that's going to become effective, I believe, in September. That law has some certain requirements around the localization of data and data transfer beyond China. I don't think that it is going to impact our ratings business, but it has a broad scope and the language of the law means it could impact other parts of our business as well as our customers and suppliers over time. I guess I would say, Owen, that impact is going to depend on how we see these regulations being interpreted by the market, and also how they're implemented by authorities. That's going to take some time to play out, so we'll have to see. As it relates to our long-term strategy in China, I don't think it changes it at this point. Mark, anything to add to that? Maybe very briefly, just to also note the regulators in both the exchange and the interbank markets did amend policies to remove the mandatory bond rating requirements for non-financial bonds over the last couple of months, as well as the mandatory requirement for disclosure of credit rating reports for public issuance. Those regulatory changes may have a negative short-term impact on domestic CRE revenue. It's positive sort of from that medium-to-long-term perspective in transforming the current regulatory demand for ratings into a more sustainable market or investor-driven demand. Okay. That's very helpful. I want to quickly go back to some of the investments in MA, in particular on KYC and CRE, Rob and Mark, you just mentioned. Do you expect these investments to drive top-line growth maybe this year or next year, or those investments will increase the stickiness of your products? I'm trying to understand better how investors can think about the ROI of these expenses. Thank you. Yeah. Look, both, I think is the answer. We're certainly making enhancements to our existing products, but we're also rolling out new products. Maybe since you mentioned it, maybe let me just touch on commercial real estate, just to give you a sense, Owen, of what we're doing, because it's a major asset class for our financial institution and investor customers. That's why we really decided that we wanted to build out our capabilities here. What we're hearing from customers is all about the integration of a range of data and insights and analytics to give them better insights and make better decisions, especially as that asset class is rapidly evolving. The thing about commercial real estate, the investing and lending workflows have historically been pretty fragmented and manual, and that became particularly challenging amidst the COVID stress. You know that a few years ago we made an acquisition of a company to give us market and property data, but now we are making investments to help with lending and investing decision-making. There's a good bit of internal product build, as well as we've supplemented that. We made an acquisition earlier in the year to give us more listings data. I think you are going to see an expansion of the product array in these areas, as well as enhancements of existing products. Got it. Thank you very much. We'll take our next question from Jeff Silber with BMO Capital Markets. Please go ahead. Thank you so much. We hear and read a lot about the tight labor market in the U.S., and I know in some other countries you're seeing that as well. Is that impacting you at all? Specifically maybe for some of the customer service reps or some of the lower-level positions. I'm just curious. Yeah. Like every company, we've seen a bit of an uptick in employee turnover as the pandemic drags on and job opportunities, I think, have increased. To address that we're doing a number of things, and that includes updating our market benchmarking to make sure that we're compensating our employees competitively and fairly. It also very importantly includes giving our employees the flexibility they want and need in this environment. Our employees as well as prospective employees, so these are our recruits, have made it very clear to us that workplace flexibility is a very important part of their overall calculus when they are thinking about either staying at or joining a firm. We see our flexible approach as a competitive advantage for talent relative to some financial institutions that have mandated five days a week back in the office. I would also say that our employees greatly value diversity, equity, and inclusion so that they can be their authentic selves and be at their best, and we have really prioritized initiatives to support DE&I. I think the last thing is that employees also really want to work somewhere where they connect with the mission. Our employees come to work every day in support of our purpose as a company, and we talk about that being to provide clarity, knowledge, and fairness to an interconnected world. Those aren't just words. They are at the heart of everything that we do. Our people are enormously committed to that purpose. That, I think, is also something that has a strong retentive effect for us. Okay. That's really helpful. Mark, one for you. You were very helpful providing quarterly guidance on the expense side. Can we get any color on the revenue side, what the cadence should be in Q3 and Q4? Thanks. Good morning. Yes, certainly very happy to give you a general idea. We'd look for really MIS revenue to be slightly down in the third quarter then slightly up in the fourth quarter. That's really driven by that historical issuance sort of pattern. You can think about similarly issuances being sort of down mid-single digits in Q3 based on our guidance and maybe up mid-single digits based on guidance in the fourth quarter. In terms of expenses, definitely you'll see an acceleration in the third quarter relative to the prior comparable. Then expenses should be approximately flat in Q4, and that of course takes into account our accelerated strategic organic investments that we spoke about earlier. Okay, great. That's really helpful. Thanks so much. We'll take our next question from Craig Huber with Huber Research Partners. Please go ahead. Great. Thank you. I likewise have a couple questions on cost first, if I could. Mark, I think you said earlier on that we should expect costs next year to be more like your second half of 2021 costs as opposed to the lower first half of the year costs. Did I hear that right? Along the same lines, I want to ask incentive comp. I think that was $61 million in the first quarter. What was the second quarter and what's your outlook? I have a follow-up, if I could. Sure. Just to clarify, my earlier question on costs was specifically related to MIS. You should expect next year to look more like the first half of this year. Just emphasizing that in the second half of 2021, we will be investing a lot in the business. In terms of incentive compensation, we accrued for the second quarter of 2021 approximately $81 million in incentive comp, and you should expect to see between $65 million and $70 million per quarter of accrual for Q3 and Q4 this year purely driven by improved full-year revenue and margin outlook. Just as a point of reference, that will be lower than the actual incentive comp accruals we took in the third and fourth quarter of 2020. Thank you for that. My other question I wanted to ask, what's your outlook for RMBS, CMBS, and CLOs as you sort of think out here over the next year given the strength you've seen here and the added stock of bank loans out there, please? Yeah, Craig. Maybe let me just start by talking about structured finance in the quarter and then give you some sense of what's contributing to our outlook. Our second quarter structured finance revenue in MIS was up almost 75%. Securitization activity kind of across the board was just very elevated. As Mark talked about earlier, very active market in CLOs, in part because you've got obviously an enormous amount of leverage loan supply. Also a lot of refinancing activity, and that's refinancing even of the 2000 vintage, given the tightening of spreads in the CLO market. Something like 70% of CLOs in this past quarter were refi. CMBS, which obviously kind of ground to a halt last year for a little while. We've also seen that rebound. That's primarily due to commercial real estate CLO transactions. We saw spreads there continue to tighten, and just the overall improvement in market conditions, and that brought back a number of issuers who are on the sidelines. U.S. ABS and RMBS activity, they're at probably the highest levels that we've seen in something like eight quarters. Overall issuance in RMBS remains quite strong across the board. Spreads are still tight. There's been a little bit of widening recently due to all the supply, but nothing, I think, particularly material. In terms of talking to bankers in this space, Craig, we're hearing they don't see many signs of this softening or slowing down. Obviously, we're going to want to wait and see as we get through what'll probably be a little bit slower August. Overall ABS fundamentals are expected to continue to improve. We just got a lot of pent-up demand in that space and a general improvement in economic activity. Thank you. The last thing I would say, Craig, that's contributing to our updated outlook on structured finance issuance for the year. Perfect. Thanks, Rob. Yep. We'll take our next question from Andrew Nicholas with William Blair. Please go ahead. Hi, thank you. Just wanted to ask a follow-up on one of your answers earlier in terms of the ESG product lineup. I know that you rolled out climate solutions or that suite in March, and an ESG Score Predictor this quarter. I guess I'm hoping you'd spend some time talking about which client types are most interested in those products today, and then whether or not you have an opinion on how the consumers of those products might evolve over time, and to the extent that that would expand the addressable market for that business. Sure. Maybe let me start with where did this market start? As we think about the customer base, I think it really started with investors who were focused on socially responsible investing. That has obviously mainstreamed to equity and fixed income investors globally who wanted ESG content for portfolio construction and portfolio monitoring. The customer base is now broadening out to essentially all of our customer types. That includes not only investors, but financial institutions, corporates. Corporates, that also includes issuers as well as governments. I think the key theme here, Andrew, is that you're seeing the demand for integration of ESG and climate considerations into a very wide range of customer processes. Like I said, that's everything from portfolio construction and monitoring, but you've got corporates who are engaged in sustainable finance and managing sustainable supply chains. You've got banks wanting to understand the ESG and climate risks of their borrowers and of the collateral that they are taking that's securing their loans. You've got governments who are wanting to inform risk mitigation and investment around the physical risk related to climate change. That's why you hear us talking so much about integration across our entire product suite. Perfect. That's really helpful. Maybe somewhat relatedly for my follow-up, I was hoping you could give us an update on some of the Moody's specific kind of ESG initiatives underway and progress there. It's obviously an important topic for all investors, as you mentioned in the answer to the prior question. Yeah. As I think about Moody's specific ESG initiatives, we are very well-positioned to help answer ESG-related questions for the business, and to be able to bring transparency to the equity, the fixed income, and the sustainability markets more broadly. Let me touch on just a couple of areas that I think are of interest. The first is within our ESG research data and analytics products. One of our competitive differentiators is our focus on dual materiality versus just financial materiality. That's because we've really built a combination of technology-enabled scoring and analytical overlays for the assessments that we're doing to be able to deliver really reliable, high-quality insights for our customers. The second area we were very strong is on physical risk assessments for climate. That's both on the operational risk, whether it's looking at asset-level data on exposure to floods, heat stress, hurricanes, et cetera, as well as on the supply chain risk and sort of how that market risk capturing companies sort of resource use. The third one I'd mention is sustainable ratings. We are very strong, very active first and second quarter for our insights and our product. Finally, to the point that Rob made earlier, just integrating that into our MA product suite. It's certainly a differentiator for us. What we are hearing from clients directly, and maybe two short client quotes here, "Tailor-made solutions with access to ESG analytics and excellent subject matter experts. Thank you. All right, we'll take our next question from Ashish Sabadra with RBC Capital Markets. Please go ahead. Thanks for taking my question and congrats on the solid results. I just wanted to focus on your private company data initiatives. Thanks for including the slide and the details on KYC and compliance, which obviously has been a strong area of growth. I was just wondering if you can discuss the traction for other use cases for private company data, and also talk about some of the organic and inorganic initiatives going forward to further expand your footprint in the private company data. Thanks. Yeah. Hey, Ashish. Good to have you on the call. You're right. The kind of biggest and fastest-growing use case for our private company data is around know your customer and, as I mentioned earlier, we're starting to see emerging demand around addressing supply chain risk. I might call that out. Our private company data fuels a whole range of use cases and a few examples, tax and transfer pricing, trade credit, master data management, digital marketing, corporate development, and the list goes on. We're seeing some very good growth across the entire portfolio. The other thing I would say is we're integrating that data into a number of our different offerings. For instance, you think about commercial real estate, when our customers are saying, "Hey, look, we want to have a more holistic understanding around the properties that we're either investing in or lending on." As you can imagine, one of the key things to understand is the profile of the tenants in those buildings. We're able to leverage that data. We're able now to have, with the ESG Score Predictor, give insights into the ESG profile of the tenants, and of course, the credit profile of the tenants. We're also integrating that content into our ERS offerings. As you can imagine, we've got our commercial banking customers who like the idea of being able to get that data into their origination platforms to enhance their own efficiency. There are a whole range of different ways that we are monetizing this data beyond KYC, and that's driving some very nice growth for us. That's very helpful, color. Just on follow-up, I wanted to ask about your cross-sell opportunity, particularly on the insurance and asset management side. Again, thanks for including that slide and talking about the holistic offering there. The question there was how well are you penetrated, how much more opportunity there is to upsell, cross-sell into your existing customer base? Thanks. Ashish, you're speaking specifically of insurance. Do I have that right? Yeah. Insurance and asset management or if you want to talk in generality. Yeah like how well the offerings are penetrated and how much more room there is to just upsell, cross-sell rather than necessarily going after new logos. Thanks. Yeah. I guess maybe I'd start by just highlighting that our current insurance franchise is primarily focused on life insurance. As you can imagine, there's some reasonably good synergies between life insurance and asset management and kind of buy side. We've been able to expand our product offerings, first of all, by leveraging kind of those combined capabilities. As we've seen insurance customers take one product, that gives us an opportunity then to cross-sell in multiple products. I talked about we started with regulatory reporting. Think Solvency II. We evolved into actuarial modeling, and that's a very important function at life insurance companies. We developed these products around IFRS 17 and CECL. What happens is kind of a land and expand strategy here where we've got insurance companies who are taking one of these products and then increasingly taking multiple products. That's very helpful, color. Thanks. We'll take our next question from Shlomo Rosenbaum with Stifel. Please go ahead. Hi. Thank you very much for taking my questions. I want to circle back to some of the questions that were asked before, specifically Owen's question. Just what's going on in China right now, and the media is reporting it, characterizing it as kind of a crackdown risk. It's more than just specific laws about some of the data privacy in terms of the regulatory environment becoming increasingly tight. It's been commercial real estate, finance, e-commerce, ride hailing, education. Just how do you think about that in the context of your business, both operationally in terms of operating in China and then also from a ratings perspective in terms of being able to rate the various businesses that are out there and what these changes in the regulatory environment might mean for your own recommendations? Yeah. Certainly, it's an evolving landscape. We've all got to navigate these changes. We've done that and we'll continue to do that in China. I guess I would say that, given the atmospherics also in U.S.-Sino relations, I'm going to talk now about our approach to the domestic rating market because we get a lot of questions on these calls and at other investor meetings. I continue to remain comfortable with our approach to the domestic ratings market, that is to work through leading Chinese players. Because I think it is going to be challenging for wholly-owned American companies to achieve leadership positions in nationally important industries in China over the medium and even long term. Certainly what's going on today, I think, reinforces that view. In regards to the U.S. government's recent business advisory relating to U.S. companies operating in Hong Kong, obviously Hong Kong is a very important business hub for us. As it relates to the substance of that advisory, I guess I would just say that we've got contingency plans in place for all sorts of potential business issues for our offices all over the world, and Hong Kong is no different. Okay. Just going back a little bit over here in terms of I think Toni was asking about this in ERS. How much of ERS is still being impacted by the ability of your people to go over to clients and meet with them face-to-face, get the implementations done? There definitely was kind of a lag in the business because of their ability to do that. I was wondering how much are you still being impacted by that, and are you seeing a change in momentum recently? Yeah. We talked about this when the pandemic unfolded in regards to kind of the big implementations, the on-prem, which as I talked about, is a much smaller part of our business now than it was. That is the part that I think was more impacted by not being able to be on site. Just the complexity of some of these on-prem solutions and installations was, I think, challenged by being virtual. I would say that we've done a great job of adapting to virtual engagement with our customers and you see that from not only the recurring revenue growth, but our sales of the SaaS solutions in that business. I think part of what is contributing to that fairly significant decline in one time is what you are touching on. Like I said, in terms of overall engagement with our customers, we've done a great job of adapting virtually. Can I sneak in one more? Please, Shlomo, go ahead. Yeah. It's just a real quick one. Just on Cortera, it looks like it generated $3 million of revenue in the quarter. Is that a good run rate to assume for the whole year? Is that like a $12 million revenue business? Absolutely. If I think about specifically Cortera and some of the other acquisitions that we've done, we feel pretty comfortable that the pace that we're executing at makes a lot of sense for our business and the direction in which we're going. I'd be comfortable, again, Shlomo, for you to assume sort of that level. If I just widen the aperture a little bit for the year, we're really looking for the 2021 M&A impact on our revenue number, inclusive of Cortera but not including RDC, to be around $44 million for the full year. I would also say that that's a very small bit of our overall data solutions business. Increasingly, what you're going to see is just that data they have is going to be integrated into a variety of our different products. We're not going to be particularly focused on the individual Cortera results. We're much more focused on what it's doing to support our broader data solutions business. That's very helpful. Thank you. We'll take our next question from Patrick O'Shaughnessy with Raymond James. Please go ahead. Good afternoon. I appreciate we've been going for a while, so I'll stay to one question. The Biden administration's nominee for Assistant Treasury Secretary for Financial Institutions, Graham Steele, has previously called for the SEC to enact structural reforms on your industry, credit rating agency industry in particular. What's the current nature of your dialogue with the SEC and the Biden administration, are you incrementally more concerned about potentially disruptive regulations? Patrick, thanks for the question. I guess I'd first say, as you'd expect, we have an active dialogue with our regulators and policy makers both in the U.S. and around the world. From time to time, our business model's been the subject of discussion by policy makers. It's been carefully studied in multiple jurisdictions. It goes back well over a decade. Most recently in 2020, there was an SEC advisory group that represented a broad cross-section of the market. The conclusions have remained the same, which is allowing for a range of business models allows the market to function efficiently and effectively. I would say that over the past decade, policy makers have substantially strengthened the regulatory framework around our industry. We as a company, and I believe as an industry, have strengthened the processes and internal controls we have in place to manage conflicts of interest and provide the market with very high levels of confidence and transparency around our business. We operate under a very robust regulatory oversight regime. We're going to continue to focus on maintaining policies and procedures that meet our regulatory requirements and provide the market with credit ratings that are independent and transparent and of the highest quality. I guess I would conclude, Patrick, with saying, over the last 18 months, as you'd imagine, I've met with a lot of issuers and investors and policymakers and regulators. I think in general, the feedback is that we have done an excellent job at managing ratings throughout what I think I would characterize as kind of the ultimate stress test for credit ratings, which is the pandemic. I believe that the market feels that it's been well-served by the credit rating agency industry over the last decade. That's very helpful. Thank you. All right, we'll go ahead and take our next question from Judah Sokol with JPMorgan. Please go ahead. Hi, I appreciate you sneaking in here at the end. Earlier you touched on MIS margins, particularly the delta between revenues being raised in the outlook but not margins. I was wondering if you could talk about MA margins where you kind of have the opposite dynamic, revenue guidance staying the same but margin guidance was lifted. I was wondering what was happening over there, what you're seeing to change that outlook. Thank you. Good afternoon. Maybe I'll start a little bit with some context here. MA is focused on top-line renewable growth through organic strategic investment, That's really given the large opportunity set that we have in front of us, while concurrently looking to ensure margin expansion and profitability. Historically we've done that, right? You've seen sort of that over or nearly 500 basis points of expansion since 2017. We have raised our MA fully allocated adjusted operating margin guidance to 30%-31%, That's 60-160 basis points higher than the 2020 actual number of 29.4%. If I think about the components of that, you see core margin expansion going up by approximately 230 basis points. That's going to be offset by a combination of M&A that we've already done and organic investments that we've done and still plan to do of around 140 basis points. That sort of gets us to that midpoint of 120. We see very strong leverage coming through in terms of the guide for the full year. Okay, thanks. All right, we'll take our next question again from Craig Huber with Huber Research Partners. Please go ahead. Thank you. Mark, I wanted to go back to cost for a second here. Once we hopefully get past this COVID-19 environment here, can you give us some help how to think about your annualized costs that you think will come back in the system in terms of employees fully back in the office or however you're going to do that, in terms of your T&E expenses and stuff? Is it sort of like a $100 million rough number that will come back in the system once we get through this pandemic versus what we're tracking at right now? Craig, maybe a little bit of context and then I'll get to the specifics of your question. Most importantly, I think we as the management team are very pleased to highlight that disciplined expense management continues to create and maintain operating leverage and investment capacity for our business. If I think about just as an interesting comparison in answering your question, if I talk about sort of the first half of the year versus the second half of the year. First half of the year, we saw operating expenses effectively up 5% year-over-year. Within that 5%, the underlying operating expenses excluding M&A and FX were effectively flat. The reason for that was really because of some of the programs that we've implemented, which does include some T&E savings, but think about the 2020 real estate rationalization program, savings from the 2020 MA restructuring plan which ended this quarter, the offshoring initiatives that we've engaged in, really holding those operating expenses for the first half of the year effectively to 0%. M&A was about 3% then FX was about 3%, and that's how you get to that 5% number for the first half of the year. Contrast that to the second half of the year, we are looking for operating expenses excluding M&A and FX to really accelerate. If we think about the mid-single digit guide that we provided this morning, about a half of that is really due to that underlying core operating expense growth. M&A is probably 2-ish% of that and maybe FX maybe 1%. That gets us to really the expense ramp for the year. We're looking at somewhere between $80 million-$90 million, and that would take into account all the additional incentive compensation accruals and any accelerated organic initiatives investments in the second half. I'm sorry, once we look at the costs that are right now, annualized, however you want to do it, versus when we get through this COVID-19 environment, how much extra cost do you think will come back when you have your employees back in the office? You have T&E where you think is a reasonable level. I'm assuming it's not going to get back 100% where it was pre-pandemic, but it's not going to be zero. If you add those two nuggets together, it's an extra roughly $100 million. How should we think about that in your mind, or roughly 3% of cost? Craig, I appreciate the follow-up question. I was trying not to grace that specifically given we're sort of in July, and we've got a little bit of time to go before the end of the year in which we provide our full year outlook for 2022. Just to give you a sense, the T&E this year is probably around a quarter of what it would have been in 2019. Certainly the run rate of T&E that we're expecting for the year is much lower. We do anticipate a portion of that coming back. To Rob's comments earlier around the way that we think about workplace of the future and workplace flexibility, we have learned to operate in a more effective and efficient manner. We've also executed a number of procurement and other offshoring activities that have generated savings. I realize the $100 million you're quoting is really based off of the $80 million-$100 million in cost efficiencies that we telegraphed previously. Some of those efficiencies will be redeployed back into investing in the business, and some will ultimately flow through to the bottom line. We'll give a clearer update of that delineation when we do the outlook probably in February of next year. Great. Thank you, Mark. All right. It appears there are no further questions at this time. Mr. Fauber, I'd like to turn the conference back to you for any additional or closing remarks. I just want to thank everybody for joining today's call. Enjoy the rest of the summer. Be well. We look forward to speaking with you again in the fall. This concludes Moody's second quarter 2021 earnings call. As a reminder, immediately following this call, the company will post the MIS revenue breakdown under the investor resources section of the Moody's IR homepage. Additionally, a replay of this call will be available after 3:30 P.M. Eastern Time on Moody's IR website. Thank you very much.