S&P Global Inc at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Maybe just the first point around that topic is just your broad thoughts on being named as CEO of S&P. You've been there 14 years and we've come to this point, so just give us some of your first thoughts there.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. And Martina, we've interacted when you were head of MI, Sustainable1, ratings. But just those leadership roles you've had, just curious how that shaped your vision and leadership over the last 14 years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 4:00PM, SPGI.N - S&P Global Inc at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. And then just one last one on this topic. I think when you first joined S&P, there was like a portfolio cleanup going on. And then like you said, you participate -- you were there for the SNL merger and now the IHS Markit merger. So just from your seat, like the breadth of the portfolio, like what are your views on the portfolio at S&P?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. Moving on to the ratings side, you've been head of the business now for several years. So just curious like from when you took over to today, if you could give us a few examples on some of the changes you've made or any kind of different characteristics under your leadership there.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. Appreciate that. A few follow-ups to that, but first, maybe let's just talk about the current issuance environment. The first half of the year was, I think, 50%-plus. July, the latest numbers that stood out was, I think, 125%. August, September looks to be pretty good. Can you just help us

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Yes. The Q4 volatility that the advisers are telling you, is that mainly tied to the election or is there something else tied to that?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. And can you talk a little bit about the refi walls? And also tied to that, like let's just say spreads and the stability in the market today maintain, why wouldn't this elevated level of refi not continue?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. And how do you think about what an eventual rate cut or rate cutting cycle as it begins? Should that accelerate the pace of issuance? Or how do you view rates and the dynamic of what we've already seen?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. Outside of refi, I mean, in terms of new issuance, I think you mentioned there's like the M&A component and there's opportunistic issuance. So maybe just quickly on the M&A side, I think we all know it's way below averages, et cetera. But I believe you guys have the rating evaluation services, right? And that fits in the non-transaction side of the line. So any insights from activity there that would suggest that M&A activity could start coming back?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. And you mentioned 1/3 of investment-grade was refi, 2/3 of high yield. But I guess my question is, what is this -- what are the other categories like the new issuance part of it? Like what are some of the reasons for that new issuance or categories?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. One of the other areas that we've seen some outperformance from you guys this year has been on the structured finance side. And I think on the leadership, you've made a concerted effort to, I guess, gain back your positioning. So maybe just take a step back, help us appreciate why you were underperforming in the structured side and what you've done to pick up the pace here.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. In ratings, the revenue growth always tends to be better than the transaction activity and part of that is due to pricing. So I just wanted to ask you your philosophy around pricing in the ratings business. And also, since you took it over, have you changed any of the dynamics when those rate cards go out?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. One kind of open-ended question for ratings is the margins. You have already pretty impressive margins and I guess they have been full based on transaction activity. But your philosophy on how you think about margins and how high or how low? At what point do you start laying off teams, I guess, if you have to maintain margins? Just any broad thoughts around there.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. I was going to ask later but since you brought it up, gen AI, you guys have had Kensho in the organization for a while. From your perspective on what's happening internally, maybe just update on the activity going on in there and whether -- is it a hype or just your perspective on gen AI and what we should expect from you guys?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. I have to ask a private credit question. I think most of the investment committees appreciated that it's not necessarily direct competition, but it is a big asset class out there. You talked about investing more in your private credit teams and efforts. Can you just talk about what you're doing there, how you think about private credit as an asset class competitively and what we should expect?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Do you anticipate private credit to be like a separate line item at some point in terms of -- like right now, we do investment-grade, high yield, et cetera. Like will that be a big enough opportunity for you guys to be its own revenue line item?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : And this might take you back to a little bit of when you were running MI, but on the topic of private credit, I think there's been a lot of talk on how ratings is obviously one opportunity. The data analytical approach or the opportunity in private credit is even bigger. I don't know if you have any thoughts on the capabilities S&P has there today.

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. Maybe one last question around capital allocation. With private credit, generally, we've seen a lot of deal activity going on there. So two parts. Maybe specifically, do you feel like there's a lot of capabilities you need to acquire broadly in private credit, whether that's ratings or the broader franchise? And then just within ratings as well, I guess there's not a lot of deals to do. So how do you think about how you allocate the capital with such high margins and good free cash flow there?

Question: Manav Patnaik - Barclays Capital Inc. - Analyst : Got it. Well, I think we'll end it there since we're just about out of time. Thank you, again, Martina. Congratulations, and hopefully, we'll have you back next year as CEO.