S&P Global Inc.

S&P Global is a financial intelligence company that provides data, analytics, and technology solutions to help clients make informed decisions in global capital, commodity, and automotive markets. It operates through various divisions, including S&P Global Ratings, S&P Global Market Intelligence, and S&P Dow Jones Indices. 

What are credit ratings? 

Credit ratings express an opinion about the ability and willingness of an issuer to meet its financial obligations in full and on time. They also speak to the credit quality of an individual debt issue and the relative likelihood that the debt issue may default. Corporations or governments often raise funds for projects—such as the construction of a factory, school, or highway, or a green energy project—by issuing debt securities like bonds. Our credit ratings can help them communicate their creditworthiness

Why Clients Obtain Loan Ratings?

 Efficient and transparent market pricing. Increased liquidity in the secondary loan market. Investor base broadened to new classes of lenders. Quick assessment of the effect of a loan rating resulting from contemplated changes to a borrower’s capital structure. Improved terms and efficiencies with vendors Third-party, unbiased recovery assessment in a heightened regulatory and credit risk environment Important consideration in the CLO market

Sources of income:

 S&P Global Ratings is a leading provider of Credit Ratings. The world’s financial markets depend on S&P Global Ratings for our accessible insights and valued perspectives that drive clarity and growth in the market. 

S&P Global Market Intelligence: Offers data, news, and analytics to help businesses and investors make informed decisions about markets and companies. 

S&P Dow Jones Indices: Creates and manages indices that track the performance of various assets and markets. 

S&P Global Commodity Insights: Provides insights into the commodity and energy markets, including data, analytics, and pricing information. 

The income has been consistent growing from 2018 to 2024 despite high interest rate since 2022 and achieve net profit margin 27.12% (year 2024).

 

The business profitability rate is predicted as shown we see their Return of Equity is 11.44% and Returned on Invested Capital is 8.44%.

 

Balance Sheet

The assets slight decrease in midst of interest rate hiking, but the real deal was end 2024  the Fed started to cut interest rate. If 2025 still continue to cut, we will see many companies doing debt refinance, which will restore back to normal time.

Current Ratio (FY 2024) is 0.85 maybe good in this case because they have increased their dividend for 51 conservative years and have shares buyback. 

  • Growth Potential: S&P's recent acquisitions, like IHS Markit, have significantly expanded its market reach. 

IHS Markit was a global leader in information, analytics, and solutions for major industries and markets. In 2022, it merged with S&P Global, creating a powerhouse in data and analytics. This merger combined IHS Markit's expertise in areas like energy, transportation, and financial services with S&P Global's strengths in credit ratings, indices, and market intelligence.


Cash Flow

There is increasing Free cash flow since 2023 to 2024.

For the full year 2024 buybacks set an annual record of $942.5 billion, up from $795.2 billion in 2023. The Earning Per Share is increasing YOY


For the full year 2025, the Company maintains its target of returning 85% or more of adjusted free cash flow to shareholders through dividends and share repurchases.



The recent Trump tariff bring the macro market down. S&P Global was down by 21.27%  which is $428 and bring back to the price of 24 july 2023 peak. The PE ratio was 37.07 that is cheap if we see the business fundmental remains unaffected by the tariff.


The global debt maturing is expected to be increase and Fed rate cut this year which will affect US 10-year bond yield. Chairman Powell regard tariff as a transitory effect on inflation.

It not only Rating business and the rest of their business will profit in the refinance.

My thoughts

S&P Global is near monopoly player in credit rating and prove to be recession-proof business. The loose fiscal policy provide S&P Global good position as debt refinance will happen in the coming years. 


S&P Global Ratings’ credit ratings are opinions about credit risk; they express our view on the relative likelihood that debt issued by companies and governments will be repaid on time and in full. These ratings reflect in-depth analysis of the issuers and their debt obligations.

The Rating business will continue to grow as the global debt continue to grow every year. This quality stock is at attractive price in recent event (Global Trade War) and comfortable holding it even if recession happen this year. They accumulating free cash flow for share repurchase and dividend, the earning power can cover liabilities.


Disclaimer: This writing is solely for my investment diary purpose. There's no advice made from this article.

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