Good day, everyone, and welcome to the Moody's Corporation Third Quarter 2023 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for question-and-answers following the presentation. I will now turn the call over to Shivani Kak, Head of Investor Relations. Please go ahead. Thank you. Good morning, and thank you for joining us today. I'm Shivani Kak, Head of Investor Relations. This morning, Moody's released its results for the third quarter of 2023, as well as our revised outlook for select metrics for full year 2023. The earnings press release and a presentation to accompany this teleconference are both available on our website at ir.moodys.com. During this call, we will also be presenting non-GAAP or adjusted figures. Please refer to the tables at the end of our earnings press release filed this morning for a reconciliation between all adjusted measures referenced during this call in U.S. GAAP. I call your attention to the Safe Harbor language, which can be found towards the end of our earnings release. Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the Act, I also direct your attention to the Management's Discussion and Analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31st, 2022, and in other SEC filings made by the company, which are available on our website and on the SEC's website. These, together with the Safe Harbor statement, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements. I would also like to point out that members of the media may be on the call this morning in a listen-only mode. Rob Fauber, Moody's President and Chief Executive Officer, will provide an overview of our results, key business highlights, and outlook, after which he'll be joined by Caroline Sullivan, Moody's Interim Chief Financial Officer, to answer your questions. I will now turn the call over to Rob. Thanks, Shivani. Good morning, and thanks to everybody for joining today's call. I'm excited to share our strong financial results as well as some key business highlights, and that's going to include some notable innovations and investments, progress on our GenAI strategy, and a spotlight on our fastest-growing business in MA. That is our Know Your Customer business, or KYC, as we commonly refer to it. Before I get started, I just want to say how proud I am that Moody's has again finished number one in the Chartis RiskTech100. That is the most comprehensive global ranking of risk and compliance technology providers, and it is a great recognition of the breadth and depth of our solutions based on both market research and customer feedback. I also want to take a moment to recognize the incredible resilience and dedication of our people, and I've really appreciated how our people have come together recently to support each other and to continue to deliver for our customers. So as you all will have seen from this morning's earnings release, we reported 15% overall revenue growth, with strong top-line performance and improved adjusted operating margins from each of our businesses, and that contributed to a 31% increase in adjusted diluted EPS in the third quarter. MA revenue grew 13% while achieving its fourth consecutive quarter of 10% ARR growth, and MA's growth continues to be led by our KYC business. We now have over $300 million of annualized recurring revenue, or ARR, and that's growing at 18%. MA also produced an adjusted operating margin of 33.6%. Now, MIS grew 18% in the quarter as the leveraged finance issuance markets continued to improve from last year's subdued levels, I would call it. And MIS revenue is now expected to grow in the mid- to high-single-digit percentage range for the full year, and that acknowledges the current uncertainties in the capital markets. Last week, we published our annual Refinancing Wall study, and that showed a 21% increase in the total U.S. non-financial corporate debt coming due over the next five years. And as I've mentioned on prior calls, these refi walls are a very important component of our long-term growth algorithm, and that remains firmly intact. As those of you who attended our Innovation Open House last month would have heard, we're moving quickly to integrate our broad data and analytic capabilities across our product suite and to leverage the power of GenAI to develop new and cutting-edge solutions to empower both our customers and our employees. The pace of innovation is clearly accelerating across our businesses. We're investing, we're launching new products, entering into strategic partnerships, all that will enable us to continue delivering market-leading growth. If you look just at the third quarter, we announced some really interesting things, and I want to take you through a few of those. I'm going to start with ratings. We've talked about on prior calls about how deepening our participation in developing capital markets, and in particular, domestic issuance markets, is important to that long-term growth algorithm that I just mentioned. And that includes Latin America, where Moody's Local has grown its customer count by more than 20% this year. And the Asia Pacific region also has some exciting opportunities, which is why in September, we further extended our domestic ratings business with the opening of VIS Rating in Vietnam, and that is a small but fast-growing domestic bond market. I often also talk about how the relevance and importance of our voice in the markets is a really critical part of what makes MIS the agency of choice for both issuers and investors. Last month, we published a really groundbreaking cross-industry report on cyber risks and practices, and it leveraged our relationship with BitSight. We had nearly 2,000 companies that provided data and inputs, and we were able to highlight more than $20 trillion of rated debt that is at high risk from cyber threats. That is, I think, a really great example of the importance of a multidimensional view of risk. In this case, understanding how cyber risks are impacting credit risks. Now, moving to MA, we're launching our first GenAI-enabled product. We call it Research Assistant, and we've already previewed it with over 150 customers. Our strategy is to commercialize the launch as we head into the year-end renewal cycle. Initially, our thinking is that the Research Assistant will be sold as an add-on to our flagship product, which is CreditView. And leveraging the power of an LLM with Moody's trusted proprietary content allows customers to generate rich credit insights in just seconds and with capabilities in multiple languages. We also expanded our coverage in CreditView to now include 12,000 new unrated names, and that allows us to better serve the private credit market. And customers who purchase that module are going to have a seamless, integrated experience that includes financials, ownership structures, credit scores, sector research, interactive scorecards, and peer analysis. And I think that is a great example of content integration to serve new customers and new use cases. We're also constantly investing in our data estate. That includes Orbis, which is one of the world's largest databases on companies, and we've expanded again our partnership with BitSight by integrating their cyber data and scores for about 250,000 entities into Orbis, and that enables our customers to better understand cyber risk. We also have several exciting product launches across Decision Solutions. In banking, we launched a new module in Credit Lens that will integrate a bank's own loan-level data with Moody's content. This portfolio module really provides a dynamic view of a bank's loan portfolio by monitoring and measuring performance and providing early warning signals. We're also integrating RMS's physical and transition risk models with our proprietary ESG and climate data into a range of banking solutions. That is empowering our customers to make better, more informed decisions around lending, portfolio management, stress testing, and regulatory reporting. These are some of the original synergies that we envisioned with the RMS acquisition. It's great to see this in practice. Speaking of RMS, I was in Europe last month at a major insurance industry gathering with a bunch of CEOs and Chief Risk Officers, and I again came away very excited about what we're doing with the industry. Together with BitSight, we recently launched the Moody's RMS Cyber Industry Steering Group with two major market players, Munich Re and Gallagher, and we're also partnering with Lloyd's of London to develop a carbon emissions accounting platform for their ecosystem. Now, in addition to these recent product launches and initiatives, we're continuing to leverage GenAI across our organization. As you heard at our Innovation Open House last month, our colleagues are taking a really active and hands-on approach in innovating and driving change. In fact, over 70% of our people have used our in-house Copilot tool, and that includes for things like coding, preparing a report, or improving an internal process. This adoption is also reinforcing our early mover advantage as we're now benefiting from an internal feedback loop, and that's allowing us to share learnings from our own GenAI journey with our customers. Speaking of customers, we've been engaging extensively with customers around our GenAI strategy, including the relevance of our curated and proprietary data and research and our approach to data integrity and security. In particular, since July, we've demoed our Research Assistant, as I said, with a number of our customers, and nearly every one of these customers believes that this product will have meaningful benefits for both their productivity and their insight. We're also revving up the work that we've been doing as part of our partnership with Microsoft in leveraging their secure Azure OpenAI service. We're building new functionality and content sets and entitlement capabilities into Research Assistant. We're also continuing to expand the ways that we leverage Microsoft Teams to collaborate internally. And I think importantly, we're seeking to expand our joint go-to-market opportunities, broadening the appeal of this partnership to new customers and market segments. And that includes creating Teams plugins that will be available to Microsoft's 300 million monthly users, and infusing Moody's content into their Dynamics and Power Platforms to enable CRM and workflow integrations. We're also continuing to explore migrating our content sets to Microsoft Fabric to enable entitlement and delivery of content and insights to our shared customers. So really taken together, I'd say we're very energized by the progress we've made, and we're excited about the opportunities that lie ahead. In addition to Microsoft, we're working closely with other leading cloud and software players, leveraging our respective strengths to deliver new and innovative GenAI solutions. And partnerships can take many forms. It can include joint product development, joint go-to-market activities, or direct commercial opportunities. And to help maximize this opportunity, we've developed a strategy and a framework and a team for third-party partnerships. I think a good example of this is the work we announced earlier this week with Google. Through this partnership, Moody's and Google Cloud are going to explore creating LLMs and AI applications specifically to help financial professionals perform faster and deeper analysis of financial reports and disclosures and other materials. So we're certainly excited to be at the cutting edge of Gen AI innovation with some leading partners. In recent quarters, we've been spotlighting one of the three cloud-based SaaS businesses within Decision Solutions, and so I want to cap off that series, if you will, with KYC. Unlike banking and insurance, which are obviously industry specific, KYC is relevant to all of our customer base. And as I've said before, a really important objective for many of our customers is to have a better understanding of who they are doing business with, whether it's making a loan, underwriting an insurance policy, onboarding a customer, or monitoring a supplier. And over the years, we have tried to be very thoughtful about how we have added to our capabilities to build a business that, as I said earlier, is generating over $300 million in ARR and growing at 18%. And two significant acquisitions that some of you ask about from time to time, and that's BvD and RDC, were really foundational elements of our KYC solutions, and they have both outperformed their original acquisition targets. And there are several thematic drivers behind the growth of the KYC business. Specifically, I would call out the digitization and automation of what are very manual and expensive in-house compliance processes, the growth in online transactions and payments, and also the need for greater breadth and precision amidst, new and increasing regulations. And all of this combines with the need for better analytics and insights, again, not just about customers, but more broadly, who companies are doing business with. So by combining our proprietary data on companies and people with analytics and through a modern cloud-based SaaS platform, we're delivering solutions for our customers in some pretty compelling ways. And these solutions use traditional AI. You've heard us talk about that on this call before. That includes machine learning, natural language processing, and integrating data on over 470 million public and private companies with more than 1.7 billion ownership links, profiles on over 20 million politically exposed people, and sanctions and adverse media. And recently, based on customer feedback, we've also added in ESG scores and credit scores. So we offer access to our KYC tools and content in several different ways, and that includes via data feeds or APIs into customers' in-house systems. It also includes full end-to-end workflow with proprietary and third-party data that supports customer acquisition and onboarding, screening, monitoring, and third-party risk management processes. And the front-end workflow software is what we acquired when we bought PassFort back in 2021. So that moved us from being just a data provider to being a full service provider in this space. That combination is increasingly being recognized across the industry, including the recent Chartis Awards, as the only vendor that's identified as a market leader for both data and workflow. We're also seeing significant growth outside of the financial sector, and we are investing to enhance the relevance of our offerings in the corporate and government space. That includes our recent launch of something called Sanctions360. That enables customers to efficiently and effectively comply with regulatory requirements regarding their customers, counterparties, and suppliers by better understanding the implications of both sanctions and sanctions by extension. Our ability to build solutions that reach a broad set of customers is really a key element of our land and expand strategy. In fact, approximately 25% of MA's overall new customer ARR growth in the last year came from KYC. Generating these new relationships then provides additional opportunities for us to cross-sell from other parts of MA. Likewise, our existing customer base also provides some very significant runway for future growth. Currently, only about 20% or about 3,000 of MA's customers buy one of our KYC solutions, and that represents an important cross-sell opportunity for our remaining 13,000 or so customers. Now, turning to MIS. In the third quarter, issuance was consistent with normal seasonal patterns. I'd say that activity was relatively subdued in July and August, and we certainly saw some stronger volumes in September. Growth was driven by leveraged finance on the back of what were the strongest leveraged loan volumes since the first quarter of 2022, and that, excuse me, coupled with elevated activity from infrequent banking issuers and an improvement in project and public finance issuance versus the prior year, all of that contributed to a favorable mix. As a result, while global issuance was up about 12%, MIS transactional revenue was up 31% versus last year, and together with 5% recurring revenue growth, MIS revenue grew 18% for the quarter. As we head into the fourth quarter, I'd say that general market sentiment remains a bit fragile. We've updated our guidance to reflect an expectation of modestly lower issuance volumes in the fourth quarter, particularly in investment grade and Structured Finance, than we had been anticipating back in July, and a heightened geopolitical turmoil combined with macroeconomic concerns around a, you know, a higher for longer interest rate environment, they continue to drive some volatility and uncertainty around yields and spreads. And these conditions are likely to be particularly impactful on opportunistic investment grade issuers, and that's a reason that we're lowering the outlook for investment grade issuance to approximately 25% growth for the full year, 2023. We also continue to see the knock-on impacts of lower asset generation on the Structured Finance sector, and so we're updating our outlook to decline by around 25% compared to the prior year. So these two forecast updates result in an overall revision to our expectation for issuance for the year. And we now expect issuance growth to be in the low- to mid-single-digit range in 2023, and MIS to grow in the mid- to high-single-digit range. So while there are, you know, some headwinds to accelerating issuance growth in the near term, refinancing walls continue to grow, and they are a key factor supporting medium-term issuance growth. And our annual study on refinancing, which we, as I mentioned, just recently published, captures non-financial corporate maturities in both the U.S. and EMEA. And we look at the next four years as an aggregate figure, and with approximately $4.4 trillion coming due in the next four years, that's up by about 10% versus last year's study. You can see that, I believe, in the appendix in our supplemental materials. I also want to spotlight the U.S. in particular. Obviously, this is the largest of all the global bond markets, and looking out over five years, and that's the length of the U.S. study, the aggregate forward maturity wall grew by about 21% compared to the study last year's study. The main contributor to this is leveraged finance, which grew approximately 27%. That's certainly going to be helpful to future mix over the coming years. Forward maturities continue to provide support for future issuance and continue to be an important part of the MIS long-term growth algorithm. I would also say that overall corporate debt velocity, which is total corporate issuance as a percent of total corporate debt outstanding, remains pretty far below historical averages. That implies the potential for pent-up issuance demand in the future. On that note, I'm going to pause here, and I'm happy to open the call for questions. Operator? Thank you. If you would like to ask a question, please dial one, 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. Again, that is star one to ask a question. Our first question comes from Heather Balsky with Bank of America. Oh, thank you very much for the question. I appreciate it. I was hoping you could talk about the refinancing wall that you just addressed and how you're seeing your customers manage through the higher for longer rate environment. Are they delaying refinancing right now? Is more getting pushed into 2024? And when you look at those potential customers who may refi, you know, any concerns about some of that debt not getting refi, that maybe those companies could be under some stress? Thank you. Hey, Heather. Yeah, I'd say that, first of all, just in terms of, you know, how our customers are thinking about, you know, financing and tapping the market, and you've probably heard me say this in the past, you know, volatility is really the biggest challenge, I think, for a CFO or treasurer. At the end of September, we saw a little bit of that with the jobs print and questions about rates and how much, you know, how much higher for how much longer. Certainly, geopolitical events can also erode confidence. I don't think we are in a risk-off mode at the moment. I would say there is some caution, but I don't think we are in a risk-off mode. In fact, where we see the most leveraged issuers, which is bank loans, is where we're actually seeing some, you know, some issuance at the moment. So that's... You know, I think that's good. You know, when I think about the maturity walls, Heather, it's interesting. You know, overall, they're up about 10% between the U.S. and Europe. If I zero in on investment-grade maturities, they're up about 12%. And one interesting thing here, Heather, and by the way, the U.S. study is five years, and the Europe is four, so I don't mean to confuse everybody. But when I look at the U.S. study, and we'll share these reports with folks if they're interested after the call, the share of U.S. investment-grade maturities within the first three years of that five year study has increased. So it's up, you know, to the low 60s% from the kind of high 50s, this time last year. I think what that means, the reason for that, is that companies have, in some cases, opted for shorter financing tenors, and also, I think higher rates have dissuaded some refinancing. So, you know, and it's interesting to look at what's going on with the average tenors. As far as, you know, the last part of your question, do I think that, you know, some issuers may opt not to refinance? I think for many folks, that'll be difficult to do. So I'd, you know, there may be, there may be select companies that have the cash to be able to do that, but I, I don't think that will be a, a widespread trend. Thank you. I appreciate it, and we love that report. So thank you. We'll take our next question from Faiza Alwy with Deutsche Bank. Yes. Hi, good morning. Thank you. Rob, I wanted to stick with issuance and ask you, you know, you said that current trends are well below sort of normal levels, and I'm curious if you've evolved your view in terms of, you know, what normal issuance might look like in the current, you know, higher for longer rate environment. Yeah. Hi there. You know, as I said, there's a couple things that lead us to believe that there is, you know, some, I'd say pent-up demand. You know, I mentioned this concept of corporate debt velocity. That's just the amount of corporate issuance over the amount of corporate debt outstanding, and that's, you know, really at a decade-plus low and continues to be this year. So that leads us to believe that there is, you know, further opportunity for issuance. I talked about the refinancing walls and over the medium term, they look promising. The other thing I think that tends to be a catalyst for issuance is M&A. You know, it's been a pretty spotty year for M&A, and yeah, it's about what we had expected. But private equity firms have a tremendous amount of dry powder. Somewhere, I think the other day, I saw they have $2 trillion to invest. I think M&A is probably not a Q4 story at this point. I think, you know, that's something that we're going to look, look into 2024 to see if that can be a catalyst for issuance. So, I do think there's some things that, at some point can change the trajectory of issuance. Thank you. We'll take our next question from Alex Kramm with UBS. Yes, hey, good morning, everyone. Just staying on, on the rating side for a minute. Can you talk about how your commercial interactions have changed at all with issuers in this? Again, everybody's using higher for longer environment here. I guess, what are, what are you doing to, to drive, I guess, new issuers? And I'm asking from the perspective also, and this is very anecdotal, but, I've heard in Europe, for example, there's some, some, you know, companies that are actually given a higher interest rate environment that they haven't seen in many decades, are considering ratings for the first time. So again, maybe anecdotal, but just wondering what you're seeing to, I guess, feed, continue to feed the business, outside of the, I guess, macro environment. Yeah, Alex, I would say, you know, two things. So we have really active engagement with issuers on both sides of the ratings business. One, as you'd expect, very active engagement with the analysts. You know, especially around, excuse me, my voice, I'm sorry. Especially in periods like this, where there's some economic uncertainty and lots of questions from investors, lots of engagement with our analysts, and that's why having very experienced analysts is so important, so that we can communicate effectively with our issuers, understand their credit stories, and be able to communicate those to the investors. And that's a big part of the value proposition. But second, Alex, I might also point to, you know, we've tried to broaden out the product suite over the years in MIS so that we can engage with, not just issuers in the public markets, but folks who may be thinking about coming to market. So a number of years ago, in fact, back when I was in MIS, we developed something called a private monitoring rating, and that was a great tool to be able to develop an analytical relationship on a private basis with a company who wanted to develop that relationship and understand what their credit profile looks like, and also give them the opportunity then to flip that into a public rating if they decide they want to tap the markets when there's a window. So y ou know, we have a commercial team that's probably between 150 and 200 people around the world, very engaged with not only our existing issuers, but also with companies who, you know, may be thinking about getting a rating, either public or private. So pretty active, pretty active engagement. But seeing a change there, given the higher rate environment. That was really my, my question. No, you know, I mean, Alex, in fairness, I think the first time mandates, you know, when you look at that, that's obviously come down from, you know, the, the highs of 2020 and 2021, and that's I'd say, you know, we often say it's, it's pretty closely aligned to the leverage finance markets. But, you know, we're still looking at something in the range of 500 FTMs for the year, and as I said, lots of engagement. In fact, that number started to tick up this, this last quarter. Right. Very good. Thank you, guys. Yep. We'll take our next question from Andrew Nicholas with William Blair. Hi, good morning. Thanks for taking my question. I wanted to ask a little bit more on the monetization plans for the Research Assistant. I think you mentioned it would be an add-on cost. Is there any additional color you can give there in terms of maybe the magnitude or the potential opportunity? And then maybe relatedly, of the 150+ customers who previewed the tool, is the expectation that the vast majority of them would opt in, or what kind of, you know, success rate do you have within the customer base that did have access to the tool already? Thank you. Yeah, these are all great questions. I want to give you answers to all of them, but I'm probably going to be able to give you better answers in the next quarter. So I guess the way we are thinking about it is, again, we're trying to preview this with our customers so that we can get feedback, so that we can iterate the product, so we can think about how we want to price and package that. I expect that many of our users will get some basic level of functionality, and other users will opt in for full functionality. As I said, we envision that as being an add-on. We're getting ready to go into our annual renewal cycle, so we'll have a very good sense on the next quarter call. We'll be able to give you some update on, you know, what that take-up looks like. And then, you know, you're going to see that then in our how we talk about our digital insights business for prospects for that business for full year 2024. I'd say, you know, part of the vision here is we also want to be able to expose those customers to different content sets than they might have access to today. So imagine that, you know, the initial customer is one of our CreditView customers. They're already a customer, and they decide that they want to opt in to the full Research Assistant functionality. But they may not be a customer of other content sets. So let's say, you know, some of our climate and physical risk content. We will be working over the course of the next year, and we're already working on this, and will be working on this, to be able to provide access to customers for content sets that they find valuable, to effectively kind of commingle, right? So when I ask for a question about credit, and I want to understand the impact of extreme weather events on the credit profile of the company, it will be able to return that answer. You know, that's why, you know, you heard me also mention the importance of entitlements. That's going to be very important for us to get that sorted out across the platform, so that we can entitle customers to new content sets and ultimately monetize all that. So again, I know on the next earnings call, I'll be able to give you a little bit more insight into the traction we've gotten with our customers. Thank you. We'll take our next question from Toni Kaplan with Morgan Stanley. Thank you so much. Just given that we're in late October now, and this is usually the call where you give some color on how you're thinking about 2024 issuance. Rob, maybe just give us your initial thoughts on, you know, sort of what you're seeing and how you're thinking about, you know, 2024 just shaping up. Thanks. Hey, Toni. Yeah, happy to do that. And, I'll talk a little bit about what's on our minds, and obviously, on the next call, you know, we'll take you through the guidance for 2024. But, you know, first, I guess I would say we expect some further economic deceleration in the U.S., Europe, and China, but I think probably a reasonable probability that we achieve kind of that mythical soft landing and avoid a recession. Inflation has moderated. There's still some uncertainty over rates. I think generally, the market is concluding that we are about at peak rates. Obviously, there's some headline risk, though, around inflation prints and job reports. Again, you kind of see what happened at the end of September. And that's important in terms of the market getting comfortable that we are, in fact, at the, you know, kind of the end of the tightening cycle. I would say that we expect default rates to pick up in 2024, but really only modestly above long-term averages. And if that's the case, spreads should be relatively well behaved because they're pretty tightly correlated to default rates. I mean, you heard what I said about M&A. I think that's really more of a 2024 story. We'll have a better sense for that as we round into the beginning of the year. And, you know, we've got some pretty strong structural support from the things that I talked about. So, we'll get into more of that on the next earnings call, but hopefully, that gives you a sense of some of the things that are, you know, factoring into how we're thinking about 2024. Super, very helpful. Thanks. We'll take our next question from Scott Wurtzel with Wolfe Research. Good morning, and thanks for taking my questions. Maybe moving back to the MA segment. The results in R&I and D&I stood out to us and were pretty encouraging. So I was wondering if you can maybe go over any of the specific products, verticals, or solutions that were driving some of the strength that we saw there. Thanks. Hey, Scott, good to have you on the call. So, yeah, we continue to see some pretty strong both demand and also utilization. That's important, all right? We've talked about the utilization of our products is very important to the overall kind of value capture. But around our economic data and our research and our models, you know, I mentioned that we have just recently expanded our coverage within CreditView, and that is integrating the content from Orbis, that company database, and also our credit scores. A while back, we started to provide credit scores, and effectively, every company that is in that giant database. W e have been integrating that into a variety of our different solutions, and we've gotten some very nice take-up from that. I would also say that, you know, again, in times where you got economic uncertainty, there continues to be a good bit of demand for, you know, economic data and content, and, you know, ability to kind of forecast and plan, and we have continued to, you know, continue to see that. We've also seen, you know, some interest coming in f rom some of the government sectors. So the growth there has been maybe even a little bit higher than from some of our other segments. So all in all, a number of things that are, you know, contributing to, you know, allowing us to keep powering along in terms of growth in that segment. You know, going forward, we've got the coverage expansion and Research Assistant that I think will provide future, you know, runway for growth. Great. Appreciate the color. Yep. We'll take our next question from Craig Huber with Huber Research Partners. Great. Thank you. Rob, what's your updated thoughts on the private credit market out there? How significant do you think it could be for your ratings business here? And is there an area here where this could potentially be a headwind to ratings growth if it's not picked up, if the stuff there is not rated? I do have a housekeeping question, if I could throw that in there. What's your incentive comp for the first three quarters, please? Thank you. Yeah. So I'm gonna let Caroline get to that in just a second, but let me take the private credit question first. And, you know, Craig, we've talked about this a bit on the calls before, and there are places where you could see this as a headwind, where companies decide that they're gonna tap the private credit market rather than the public markets. We have seen more and more cases where companies have done that, and they've actually come into the public markets. That makes sense, because in general, the public markets tend to be cheaper than the private markets. So I actually, you know, when this kind of first came up, and I'd say maybe it might have been a year ago when we first started talking about this on these calls, I've gotten, I'd say, more and more positive on the opportunity for Moody's. And while acknowledging, you know, what I just mentioned, there's just a lot of opportunity for us to serve this market. There's a lot of opacity in this market. When you're in times of increasing credit stress, the investors in those markets want to have a better understanding of what the credit risk is of the investments that they're holding. And so we've had some really good discussions, both with alternative asset providers, so the private credit lenders, as well as investors in their funds. We're seeing demand for some form of credit assessment coming from both of those constituents. You know, I've spent a good bit of time actually engaging with you know, the private equity you know, firms and alternative asset managers. You know, there are just a number of ways that we already work with these firms. They're pretty extensive relationships across the firm, but there are more and more ways that we're continuing to support them. So in general, Craig, I actually see this as a net positive for us. It has meant that we have had to think about our product offerings. I mentioned the coverage expansion and CreditView, and importantly, you know, one important reason we did that is to make it more relevant to that market. We've thought about some of our rating products and assessment tools. So it has led us to think about the product suite and make sure that we're evolving the product suite to meet the needs of what is obviously a growing market. So Craig, with regards to incentive comp, our accruals align with our actual and projected financial and operating performance, and we expect incentive comp to be between $370 million and $390 million for the year, with approximately $90 million for the fourth quarter. For Q1, it was $89 million. Q2, it was approximately $100 million, and for Q3, it was approximately $100 million. Great. Thank you both. We'll take our next question from Owen Lau with Oppenheimer. Thank you for taking my question. So going back to MA, I think the margin was pretty strong at 33.6%, and I know you maintained the margin guidance for MA. But going forward, given that, you have been investing into GenAI, how should we think about the sustainability of your margins? Thank you. Hey, Owen, great question, and, you know, just on the margin, you know, just one thing I'll say is, you know, I'm not sure I get too wound up about, you know, a margin in any given quarter, and you've heard us talk about some seasonality in both expenses and the way that, you know, revenues can come in. Obviously, it was a good quarter for us. I think, you know, I would say that, we have really tried to be disciplined across the business and to think about how we are reprioritizing across the business to make sure that we are putting resources against the highest and best opportunities. Obviously, we have made, you know, some investments to date in GenAI. In fact, I was just with, you know, our team that is providing our LLM as a service across the company, you know, probably 25 people. Some of those are from, you know, different parts of Moody's, and some of those are new to Moody's. I guess what I would say, Owen, is, you know, looking forward, I mean, you've heard me talk about, you know, we want to lean into growth and invest in growth. And one reason that's, you know, that's so important is in some of these markets, you have literally new customers coming into the market adopting solutions. So, you know, we talk about KYC and how that's broadening beyond just meeting regulatory requirements and so wanting to understand who you're doing business with, who you're, you know, what your supplier risk looks like. That means you have new customers coming into the market, and you've seen our retention rates pretty similar. You know, many other players in the market who, you know, provide services like this have very robust retention rates. That means those customers are sticky. So once you get that customer, it's hard to dislodge that customer. So while we have a lot of market growth, we want to make sure we invest in the products and the sales distribution to make sure that we get those customer relationships. And then over time, as we continue to build more and more scale, we will have the opportunity to grow the margin. Next year, I guess the other thing I'd say with just GenAI investment, it's early days, right? I mean, yes, I've got a team here I mentioned, but we haven't started putting customers on the products yet. And so that means that we're going to have growth in, you know, our expenses around compute capacity and other things. I imagine we'll continue to be building out, you know, kind of our capabilities across the firm next year. But we're also going to balance that with, you know, making some hard calls and being very disciplined in where we invest across the entire business. So hopefully that gives you a little feel, Owen. Got it. Thank you very much, Rob. We'll take our next question from Seth Weber with Wells Fargo. Hi, good morning. I wanted to actually follow up on that question. I was intrigued by the KYC discussion in your remarks. I think you said 20% of MA customers buy KYC today. I was just wondering, you know, can you just talk to what that trend line has looked like and where you think that could go from, you know, like, a wallet share perspective? And I think you may have touched on this a little bit, but, you know, are these customers that are not using your -- you know, are these new wins, are they customers that aren't using anything today, or are they conquests? Or just, you know, how we should think about that opportunity? Thanks. Yeah, it's a great question, and this is probably something we're going to be talking with you more about, next quarter, would be my guess. But, you know, again, if you think about what has gone on historically, that customer base, it really started, really in financial institutions and mostly in banks. And then it started to evolve, as, you know, all corporates had to start complying with different, you know, sanctions, regimes around the world. But also, as corporates said, "Hey, w e want to start." This trend I talked about around better understanding who you're doing business with has driven a need from our customers to really get foundational master data and then build a set of, you know, leverage analytics on top of that to help them think about things like sales and marketing optimization, extending trade credit, onboarding and monitoring customers, and thinking about supplier risk. Those are. That's a set of activities that almost every one of our companies, our customers, is doing. And so we're having conversations with more and more and more of our customers around, well, how do you think about the master data and linking then the data and the analytics that you have at your firm, and that we can layer on top of that to help you get a better, more holistic view of who you're doing business with, and to power those different use cases? And so that gives us some confidence that we're really going to be able to grow in the corporate and government sector even faster than what we've done. It's a small... You know, you can see the customer split, but we think we have an opportunity to really get some growth there, and I think you'll hear us talk more about that in the next quarter when we start to talk about, you know, what our product pipeline looks like for 2024. That's helpful. Thank you. Our next question comes from George Tong with Goldman Sachs. Hi. Thanks. Good morning. On slide 10, you trimmed your issuance guidance from mid-single-digit growth to low to mid-single-digit growth, and the cuts are centered around investment-grade leveraged loans and structured finance. How much of your updated issuance outlook is locked because of refinancing needs versus discretionary in nature and more influenced by macro considerations? And then related to that, does the refinancing pipeline, particularly in high yield, what does that tell you how quickly, debt issuance can expand for next year? George, I tell you what, I'm going to try to give you some insight. You're asking about fourth quarter, right? The assumptions going into the fourth quarter. And you talked a little bit about refinancing and how much does that give us confidence, how much is, quote, you know, kind of in the bag. But let me give you some insight, and I think it's going to be helpful for everybody on the call, into how we are thinking about the fourth quarter from both an issuance and revenue standpoint. And I'm going to talk more, focus more on really sequential growth in issuance and revenues than maybe perhaps I normally do, because I think in some ways, at the moment, it's a little easier to triangulate back to the environment that we are, that we just experienced in the third quarter versus was a very different environment, you know, a year ago. So overall, we're assuming low- to mid-single-digit decline in total sequential issuance growth for the fourth quarter versus the third quarter of 2023. And that translates into high-teens growth on a year-over-year basis now for Q4, looking back to Q4 2022. And then that gets us to our low- to mid-single-digit issuance guide for the year. Let me drill down, George, because, you know, you were touching on corporates. We're assuming that corporate issuance grows, let's call it mid-single digits for the fourth quarter versus the third quarter of 2023, and that translates to something like mid-single digit revenue growth for corporates in the fourth quarter versus the third quarter, okay? So mid-single digit issuance and revenue growth sequentially in the fourth quarter. For all other ratings lines, we expect pretty flattish revenue growth versus the third quarter of 2023. And then if now I come back up to overall MIS revenue, that translates to something like low single-digit revenue growth for the fourth quarter versus the third quarter of 2023. Now, when I go back to, you know, looking at for Q22, you know, something like mid-20s% growth, you know, obviously given it was a much lower comp. And I, you know, I would acknowledge I've got a wider range at this point than we normally do, but there's just a little more uncertainty in the market. So, you know, I want to be very clear with everybody about what we've assumed. And then again, in some ways, I'm anchoring to the third quarter here so that you can get a sense. If you see a variance one way or the other versus the third quarter, you're going to have a good sense of what that's going to do to revenues, to MIS revenues and in turn, earnings. And again, just to George, just to put a finer point on it, a key assumption really then is around corporate issuance for fourth quarter, and that's mid-single digit growth versus the third quarter that we just finished. And I would say there's, at the moment, it's probably a little more downside than upside, you know, to this, but we're not even a full month into the quarter, so, you know, we'll see. I hope that's helpful in helping you think about, you know, what's going on in the fourth quarter. Sure. Yes, that's helpful. Thank you. We'll take our next question from Ashish Sabadra with RBC Capital Markets. Thanks for taking my question. I wanted to focus or drill down further on the insurance ARR. We saw a material improvement there from 6% last quarter to 8% in the third quarter. I was just wondering if you could provide some color where you're seeing that improvement. We obviously saw the Exposure IQ product at the Innovation Day. So is it more driven by the climate solutions, the RMS acquisition, or the core business as historical ERS business? So color on that front will be helpful. Thanks. Yeah, Ashish, thanks. It's a good, good question. You know, last quarter, I think we talked about hitting that high single-digit mark for ARR growth within insurance, and, you know, you see 8%, and that's, as you said, improved. And I'd say there's a few things that are going into that. And as you know, we've got what I'll call kind of a P&C franchise, which is really historically the RMS franchise, and then we have the life franchise, or historically the Moody's franchise, and now all of that is our insurance business. And in P&C, you know, we have started to see an improvement in ARR growth from our core RMS customers. And you know, some of that is just good old-fashioned blocking and tackling and great sales execution. We have a very robust Intelligent Risk Platform. That's the SaaS platform. So we're having some, you know, nice success in migrating people from on-prem solutions to the SaaS platform. And we're also, as you mentioned, you know, starting to roll out new solutions. It's giving us an opportunity to continue to not only bring in new customers, but also to be able to do more for our existing customers. So that's one. I would also say that, you know, while it may not be showing up in the insurance segment, we also feel very good about the cross-selling synergies, you know, that we're seeing where we've got insurers who may be buying solutions from other parts of Moody's Analytics. You know, so a good example is around, you know, KYC and master data. And then on the life business, so, you know, over the last couple of years, there was some growth. One of the drivers was around some of the, you know, IFRS 17 accounting standards. You know, some of that is now in place. But you know, now we've, you know, now we're in a wave of, you know, kind of product enhancements and other things. So we still have, actually, some very nice growth in the life business. So all in all, pretty encouraged by not only the growth in the insurance business, but I think the opportunity for us to continue to see some further acceleration there. That's very helpful color. Thanks. Thanks a lot. We'll take our next question from Manav Patnaik with Barclays. Just want to ask real quick, first off, any disclosures you can give us on revenue or growth in your ESG climate businesses that are within Moody's Analytics? And is it at this point still mostly RMS and insurance, or is, i t sounded like you were alluding to some cross-sell opportunities as well. So, any color there, be appreciated? I'm going to flip that over to Caroline. Sure. Maybe we'll answer the RMS question first. So we are on track to achieve the $150 million of RMS-related incremental run rate revenue by 2025. And with regards to climate and ESG for 2023, we expect about $200 million in annual revenues there, growing at a double-digit pace. So there's really ongoing demand from our customers with regards to more information around climate, and that's really helping us out with that. Yeah, and I, you know, I'd say that obviously the bulk of what Caroline just talked about is from RMS. Beyond that, we've got ESG scores, we've got the ESG module, which is an extension of our CreditView module. And we also have a sustainable finance franchise that produces Second-Party Opinions on labeled bond issuance out of the rating agency. All of that is what goes into ESG and climate. And the other thing I would say is that, I mean, Caroline's right. We've got, I think, you know, healthy demand, ongoing demand, but I gave the example of integrating the RMS transition and physical risk data and models into our banking solution. So that was, you know, that was always the plan and, you know, those kinds of things are going to help us continue to grow that, you know, overall pool of revenue from ESG and climate going forward. We'll take our next question from Andrew Steinerman with JP Morgan. Hi, I just wanted to jump into RMS a little bit more. First, could you mention how well RMS is growing in the third quarter? And, you know, I surely you definitely caught my ear with the earlier comment about how Moody's is integrating the RMS climate risk data into ESG solutions for banks. So my question is, you know, how much of RMS revenues are now coming outside of that core P&C insurer? And, you know, are the products really different when you're delivering RMS data to banks than insurers? Yeah. Hey, so I don't think we don't disclose RMS growth, you know, at the, you know, on a quarterly basis. But I can tell you that, you know, our target of RMS revenue, including synergies, to grow in a high single-digit range for 2023, you know, that's we're still on track for that. And, as I mentioned, the two components is, you know, RMS growth is what I'll call core growth has been picking up. I think we all understand, you know, there was a fairly low growth profile when we acquired it. That is improving, and we are starting to get more and more synergy revenue. I guess the other thing I'd say, Andrew, is, you know, something like integrating the content into our banking solutions will capture that as synergy revenue, but you won't necessarily see that in the insurance segment. Which is why I think it's important for us to be able to give you know, the color on how we're capturing synergy across the broader business. And Andrew, can I make sure I just understand that last bit of the question? It was the difference in insurance delivering in insurance and banking. Yeah. So when you look at the type of RMS climate data that banking customers are consuming, i s it very different than insurers? Yeah. Let me just remind you, like, when you look at a CAT model, you got to be an expert genius to consume that data. Yeah. You do. You know, I actually, in a way, I've said this before, and in a way, I've sometimes thought of that content is in some ways trapped in very sophisticated insurance workflow software, right? So there's really, really rich, detailed weather models, climate models, and massive amounts of data that has historically been used in the RMS software for the larger global insurers and reinsurers and brokers around the world. And the reality is, and this was a main driver of why we bought this company, we knew that there was going to be a lot of demand for that content, but delivered in a different way. So for instance, we've come up with something called Climate on Demand, where we can actually do fairly simple scores and give you an average annual loss estimate. So this is the financial quantification of a weather event on a given property, and we can go down to a ten-meter resolution. So banks are saying, "Hey, I'm underwriting a loan, securing it by commercial real estate. And I understand the insurance policy is an annual policy, but this is a 15-year loan. And so I want to start to understand." So we are doing exactly what you just described, is how do we take that content and deliver it to customers in different ways that are consumable for them in their workflows, in ways that are valuable? And you know, that, I think, was very difficult for RMS to do as a standalone company. That's part of the value that that we're bringing here. Okay. Thank you very much. We'll take our next question from Russell Quelch with Redburn Atlantic. Yeah. Hi, thanks for squeezing me in. I noticed there was a small uptick in the expected restructuring charge for 2023 versus what you said in Q2. I know it's very small, but wondered what's driving that. Maybe, sort of a broader question: Is there room for further restructuring in 2024 if the economic environment doesn't pan out, like you laid out in response to Tony's question? Thanks. Yeah, Russell. Hey there. I think I'm going to hand that to Caroline. Sure. So we expect our restructuring program to be substantially complete by the end of the year. We are forecasting up to $205 million for about $100 million-$110 million in MA and $90 million-$95 million in MIS. And the charges relate to both real estate rationalization and workforce optimization. And we expect to incur restructuring charges between $20 million-$40 million in the fourth quarter, you know, over 65% of that being related to real estate. So with regards to expanding this into 2024, we have no plans for that. Yeah, and Russell, I would just, you know, to add to that, you know, it was interesting back when we first announced this. I think it was on this call a year ago, and, you know, I got some questions from people like, "Hey, why are you all doing that?" And I don't get those questions anymore. You know, we really took some hard decisions and took a hard look at the business and figured out, you know, where we wanted to reprioritize. And as Caroline said, you know, we've continued to do that through the course of the year. But I think in terms of restructuring program, we're done. There'll still be, and you heard me talk about this, we're still going to be thinking about where we move resources and prioritizing things, but I think as far as restructuring, I think we're done. Okay, thanks. We'll take our next question from Shlomo Rosenbaum with Stifel. Hi. Good afternoon. Thank you for taking my question. I have kind of an operational question for you, Rob. Just looking at the operating profit going up, you know, pretty substantially in MA from 2Q to 3Q, I was wondering if you could just discuss more kind of detail around, you know, what actually happened there. Like, I don't usually see that kind of move in your business. Was it getting out of what, leases at one point in time? Or, you know, can you just give us some on-the-ground thoughts of that? Because usually I think of your business as very much, you know, in that area, you know, there's your costs, or a lot of them are people. And I'm not sure that you, you know, you had that kind of of movement within your headcount. Yeah. Thanks, Shlomo. And I guess I'll reiterate the, you know, kind of health warning of, you know, I don't want to get overly fixated on one quarter. Obviously, it was a good quarter from a margin perspective, but we do have, you know, some seasonal spending patterns in MA. This year, I think, is no different. And obviously, you know, you're looking at then our full year guidance and what that implies for the fourth quarter, and obviously, that means that the margin will be a little bit lower in the fourth quarter than it was in the third quarter. So, you know, kind of why is that? I would just say that, you know, as we go into the end of the year, we've got all sorts of, you know, projects that start to, you know, people are trying to get them done by the end of the year. We also have a good bit of increase in selling activity. It's just a huge renewal and sales period for us. And the other thing I might say is that, you know, again, you've heard me talk about this, this reprioritization. You saw that we took some additional actions that were reflected in that updated restructuring charge. So there were some things that went on, you know, over the course of the summer. That was part of that reprioritization, and some of that went into that restructuring charge. Some of that then flowed through a lot, you know, we saw that flow through. But then in the fourth quarter, as I said, you know, we've got a plan for investments. We know we're going to have a lot of selling activity. And, you know, the other thing I'd say is, you know, if you think back to the call, you know, back in February of 2020, earlier this year, I mean, GenAI wasn't even a thing, you know? And so we've had to figure out how are we going to get after GenAI, how are we going to have the right resources with the right skills and really go after that and fund that internally. And so again, that was all part of the, you know, kind of the reprioritizing and repositioning, you know, within the business. So hopefully that gives you a bit of a sense, but I wouldn't get too caught up just in this quarter. Okay. Thank you. Yeah. Our next question comes from Jeff Meuler with Baird. Yeah, thank you. Want to ask a long-term question on corporate debt velocity. I, I hear you that it's the lowest it's been in a while. There's a lot that's impacted issuance. We should see cyclical recovery, and refi wall should be supportive. But if you look at, like, the very long term, like a multi-decade view, I'm curious what the data shows in terms of correlation. After a period of a material interest rate increase, does corporate debt velocity tend to persist at a low level, or is that correlation not really there? Thank you. Yeah. This may be. You may have stumped the professor on this one. I've got the data, but I don't have it handy. But what I would say is that we have looked at issuance. So I'm not going to necessarily come at this from a debt velocity standpoint, but we have looked at issuance in periods of higher interest rates. You know, I think it's during the period of transition is when we typically see more challenge to issuance. So it's not, not simply an absolute higher level of rates that is the headwind. Typically, higher rates are also accompanied by economic growth, which ultimately is positive for issuance. So over the longer term, you know, we tend to see that correlation, which is supportive of issuance. The other thing is, I mean, just thinking out loud here, you know, if we go back decades, you know, the size of the markets is just vastly different. So I just don't know how comparable, you know, that really would be. But you know what? This might be something we can follow up on with you and dig in on. Cool. Thank you. Yep. Our next question comes from Jeff Silber with BMO Capital Markets. Hey, good afternoon. This is Ryan on for Jeff. Just a quick clarifying question. Looking at the quarterly changes in rated investment grade issuance volumes and revenues on page 5 of the release, I saw issuance was up 6%, but revenues down 6%. Can you just explain the disparity there and how the pricing comes into play there? Thank you. Yeah, that was a mix issue. So in investment grade, we have typically two types of issuers. Those who are on, you know, kind of frequent issuer programs and those who are less frequent opportunistic issuers. And so in this quarter, that mix tended more towards the frequent issuers and less towards opportunistic, which in some ways makes sense as you've got, you know, kind of a rising rate environment. The opportunistic investment grade issuers are going to sit on the sidelines if they can. So I think that was primarily what was going on there. It really wasn't a pricing issue. All right. We will take Craig Huber's question with Huber Research Partners. Yeah, Rob, I got a follow-up question. On pricing, can you just quantify what pricing is doing this year for each of your two main segments? It's up about 3%-4%. How else should we think about that for 2023? Yeah, it's, you know, pretty steady eddy. And I guess, Craig, the, you know, the real devil is in the details because it does depend to some extent on the issuance mix. So as you know, we don't just have a blanket price increase across, you know, the entire issuer community. We're really, really thorough and thoughtful about how we do this, and we think about regions and asset classes and, you know, the value and the costs to support the surveillance. And so all of that goes into how we think about pricing. So, you know, again, you don't have a blanket price increase. So depending on where we have more or less price increases that average out to 3%-4%, it depends on what effectively kind of our pricing take is in any given year. I would say the idea of, you know, kind of 3%-4% on average across the portfolio is true this year, and we expect it to be true again next year. Great. Thanks, Rob. Yep. There are no further questions at this time. I'd like to turn the call back over to Rob Fauber for any additional or closing comments. Okay. Well, I think that does it. I really appreciate everybody for joining the call, and we will talk to you in February. Thank you. Bye-bye. This concludes Moody's third quarter 2023 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 will be made available immediately after the call on Moody's IR website. Thank you.