標普全球 (SPGI) 2017 Q3 法說會逐字稿

Good morning, and welcome to S&P Global's Third Quarter 2017 Earnings Conference Call. I'd like to inform you that this call is being recorded for broadcast. (Operator Instructions) To access the webcast and slides, go to investor.spglobal.com and click on the link for the quarterly earnings webcast. (Operator Instructions)

I would now like to introduce Mr. Chip Merritt, Vice President of Investor Relations for S&P Global. Sir, you may begin.

Thank you, and good morning, and welcome to S&P Global's earnings call. Presenting on this morning's call are Doug Peterson, President and CEO; and Ewout Steenbergen, Executive Vice President and Chief Financial Officer. This morning, we issued a news release with our third quarter 2017 results. If you need a copy of the release and the financial schedules, they can be downloaded at investor.spglobal.com.

In today's earnings release and during the conference call, we're providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management's. The earnings release contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP.

Before we begin, I need to provide certain cautionary remarks about forward-looking statements. Except for historical information, the matters discussed in the teleconference may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. In this regard, we direct listeners to the cautionary statements contained in our Form 10-Ks, 10-Qs and other periodic reports filed with the U.S. Securities and Exchange Commission.

I would also like to call your attention to a European regulation. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should give me a call to better understand the impact of this legislation on the investor and potentially the company.

We're aware that we do have some media representatives with us on the call. However, this call is intended for investors, and we'd ask that questions from the media be directed to Jason Feuchtwanger at (212) 438-1247.

At this time, I would like to turn the call over to Doug Peterson. Doug?

Good morning. Thank you, Chip. Welcome to the call today. Consistent with the first half of the year. The company delivered another solid quarter. The underlying environment for businesses is favorable with global GDP growth in every geography, higher and stable commodity prices, strong equity markets and modest growth in U.S. bond issuance. With this backdrop, S&P Global is doing well.

Let me begin with the third quarter highlights. We attained strong organic revenue and adjusted operating profit growth in every segment. We delivered 190 basis points of adjusted profit margin improvement and adjusted diluted EPS growth of 19%. As a result of our year-to-date performance and our expectations for the remainder of the year, we're increasing our adjusted diluted EPS guidance to a range of $6.55 to $6.70. We'll complete our $500 million ASR by month-end and believe that reinvesting in our stock represents a great investment and a good use of our cash. We returned $604 million through share repurchases and dividends, bringing our year-to-date total to $1.2 billion. We continue to focus on delivering meaningful revenue growth, launching new products, investing in productivity and returning capital to shareholders.

Looking more closely at the financial results. The company reported 5% revenue growth and achieved 12% growth on an organic basis. The company achieved 190 basis point improvement in adjusted operating profit margin due to strong organic revenue growth, the sale of lower-margin businesses and productivity initiatives. We delivered 19% adjusted diluted EPS growth. There are some puts and takes to these figures as we recorded $0.03 a share unfavorable impact from ForEx and $0.14 a share favorable impact from stock option exercises, both of which Ewout will discuss in a moment.

What I'd like to do first is provide a bit more color on some of the current and future drivers of our businesses. Now let me start with bank loan ratings, which have been a growing part of the Ratings business over the past few years. Bank loan ratings are primarily issued on leveraged loans typically rated BB+ or lower. Over the past few years, both the volume of leveraged loans and the percent of leveraged loans rated by S&P have increased. During the quarter, bank loan revenue of $83 million was a key factor in the revenue growth of the Ratings segment.

This chart shows the U.S. leveraged loan inventory, with each bar depicting leveraged loans maturing in the next 8 years, as of the end of each period. At the end of 2014, for example, $809 billion was going to mature in the following 8 years. At the end of 2015, $850 billion was going to mature in the next 8 years and so on. The total amount of outstanding leveraged loans has increased each year at a compounded annual growth rate of 11% since 2011. When tracking issuance data, we always try to point out that where issuance takes place, which type of issuance and the size of the deals make a difference in the revenue we realize. Global issuance in the third quarter, excluding sovereign debt, decreased slightly. Structured finance, however, was quite strong. Geographically, issuance in the U.S. increased 5% in the third quarter with investment grade increasing 9%, high-yield increasing 1%, public finance down 19% and structured finance increasing 26% due primarily to strength in CLOs and CMBS. In Europe, issuance decreased 17% in the quarter, with investment grade declining 22%, high-yield decreasing 29% and structured finance increasing 13% with strength in CLOs and RMBS. In Asia, issuance increased 4%. The vast majority of Asian issuance, however, is made up of local China debt that we don't rate.

Ratings recently published its final issuance forecast for 2017 combined with its initial 2018 forecast. This forecast provides a range of issuance estimates for each of the major issuance categories. For 2017, excluding international public finance, which is not material to our results, we expect a median increase of approximately 2% in 2017 and approximately 1% in 2018 in overall issuance. While both financial services and structured finance are forecast to increase in both years, U.S. public finance is forecast to decline in both years. Our cautious outlook is primarily due to the expectation that most developed countries' central banks will begin to reign in a monetary stimulus and unconventional monetary programs and many financial markets have reached new highs amid low volatility, and it has become more likely that in 2018 market volatility will increase.

Here's a new chart that shows how U.S. investment-grade corporations utilize bond proceeds. Issuance for M&A, buybacks and refinancing depicted in the bottom 3 colors of each bar has increased considerably in recent years. There's been a material rise in debt-financed M&A and share buybacks since 2013 as investors have become more comfortable with blockbuster offerings. Note that of the largest 40 deals ever printed, nearly all have been transacted since 2013 for M&A or buybacks. Please also note that investment-grade financial sector issuance, which can make up as much as half of total issuance is included in the general corporate purpose category.

If we take a look at U.S. high-yield issuance over the same time frame, we see that high-yield issuance is much more heavily dependent on refinancing needs in the investment-grade market. High-yield borrowers generally issue in response to maturing debt or for specific M&A or recapitalization efforts.

Finally, for Ratings. I want to share some of the progress we've made with our green evaluations. Propelled by the 2015 Paris Climate Agreement and the impetus it created to finance $1 trillion a year in investments for renewable energy and other initiatives to limit global warming, reinvestment is on a firm upward trajectory. S&P Global Ratings launched its Green Evaluations in April and includes evaluations of buildings, transport, energy efficiency, water, traditional power plants and nuclear. We're encouraged by the acceptance of our Green Evaluations in the market. This slide includes some of the global bonds we've evaluated to date, such as the Mexico City Airport Trust and the Greater Orlando Aviation Authority subordinated revenue bonds.

Within Market Intelligence, we continue to extend our capabilities of our offering during the quarter. First, we launched RatingsDirect Monitor, which features real-time visually interactive and intuitive ways for end users to receive information that is relevant to the companies in their investment and counterparty portfolios. Second is an expansion of SNL data available via data feeds. Historically, SNL had a very small data feed business. Earlier this year, we began adding certain SNL data sets to Xpressfeed, our data feed management system. During the third quarter, we rolled out new alternative and unstructured data sets through Xpressfeed, such as bank regulatory data, bank branch data, real estate property data and corporate transcripts. This should prove valuable to investors seeking new sources of alternative data that can help uncover relationships and new alpha-generating ideas. Third is enhanced credit analytics workflow, which facilitates counterparty analysis and integration of SNL data. It also extends model coverage to include loss given default for Europe and the Middle East as well as relative contribution analysis and 30-year term structures.

Turning to Platts. We often share new product launches, but today, I want to share with you progress made on a launch from a few years ago. In the past, we've discussed the increasingly important role that LNG will play in unifying global natural gas markets. Platts Japan Korea Marker is the LNG benchmark price assessment for spot physical cargoes delivered into Japan and South Korea. As these 2 countries take the largest share of LNG imports in the world, Platts JKM has become a key reference price for these physical shipments. And is often the case, when a physical market develops, market participants want to be able to hedge their position. This chart shows the surge in monthly JKM swap volumes on ICE. Volume depicted here represents the total amount of trading activity or contracts that have changed hands during the month. Open interest is the total number of outstanding contracts that are held by market participants.

Next, I'd like to share with you several new products in S&P Dow Jones Indices. The first is the launch of the S&P/BMV IPC VIX Index in conjunction with the Mexican Stock Exchange. This index utilizes the same methodology as the CBOE Volatility Index. Second is the launch of the Corporate Carbon Pricing Tool, which helps companies assess exposure to regional carbon pricing mechanisms. The tool combines the companies' greenhouse gas emissions and financial performance data with Trucost regional carbon pricing information to provide insights on carbon pricing risk out to 2030. Trucost has curated a global database of current carbon regulations, emissions trading schemes, fuel taxes and potential future carbon pricing scenarios designed to achieve the goal of the Paris Agreement to limit global warming to 2 centigrade or less.

Third, Transamerica Asset Management has launched 4 new strategic beta ETFs designed to provide core equity strategies with an embedded risk management feature, called the DeltaShares by Transamerica suite. The new ETFs are the first to track the S&P Managed Risk 2.0 Index Series, which offers the exposure to a given segment of the equity market while seeking to control volatility. Even though ETFs were only launched in July, 2 of them have market caps that are among the top 10 of the new ETF launches this year.

And fourth is a strategic investment in Algomi. Algomi is an innovative Fintech company that has created a bond information network that enables buy-side and sell-side firms as well as exchanges to harness data to improve financial trading decisions, allowing for greater transparency and artificial intelligence-powered trade facilitation.

With that color, let me turn the call over to Ewout, who'll provide more specifics on our business results during the quarter. Ewout?

Thank you, Doug, and good morning to everyone on the call. This morning, I would like to discuss the third quarter results and then provide specifics on our increased 2017 guidance.

Doug already discussed the 12% growth in organic revenue and the 19% increase in adjusted diluted EPS. I would like to touch on a few other line items.

First, I would like to put the $12 million increase in adjusted unallocated expense into perspective. About 1/3 was due to a company-wide IT project to replace our order to cash system. About 1/3 was for professional service fees, incurred to identify additional growth and productivity opportunities. We believe that this will be the peak quarter of spending on both of these initiatives. The final 1/3 was for performance-related incentive compensation.

Second, the adjusted effective tax rate of 27.9% improved primarily due to the discrete tax benefits from stock option exercises, which I will review in a moment.

And third, our ongoing share repurchase program, coupled with our recent ASR, led to a $7.4 million decrease or 3% decline in average diluted shares outstanding.

During our fourth quarter of 2016 earnings call, we noted a recent FASB guidance change for accounting for stock payments to employees, which we estimated at the time could increase 2017 EPS by $0.10 to $0.15, depending a SPGI's share price and option exercise activity. This change also impacts EPS whenever the fair market value of employees' stock grants exceeds the grant price. The impact is recorded as a reduction in tax expense. Due to exceptionally high levels of option exercises during the third quarter from current and recently retired employees, we reported a reduction in tax expenses that improved third quarter adjusted EPS by $0.14. It is difficult to estimate the impact in future quarters, but let me make 2 observations that should be helpful.

First, the company no longer grants stock options. And at the end of the third quarter, there were 2.1 million employee stock options outstanding. When the stock options are exercised, assuming that they are still in the money, there will be a tax benefit.

Second, the company continues to grant restricted stock. Each year, in the fourth quarter, another tranche of restricted stock units will vest and provide a tax benefit whenever the fair market value of the stock exceeds the grant price.

For the fourth quarter of 2017, if we assume no stock options are exercised and the stock remains at today's stock price, we estimate we would record a tax benefit of approximately $0.07 in the fourth quarter associated with restricted stock. This amount is included in our updated guidance.

Net of hedges, foreign exchange rates had a $4 million positive impact on the company's revenue and a $12 million negative impact on adjusted operating profit or about $0.03 per share in the third quarter. The bulk of the impact was in the Ratings segment. Ratings adjusted operating profit was primarily impacted by the Australian dollar and British pound. Taken together, the quarter included a $0.14 gain in stock option exercises, a $0.03 loss from ForEx and adjusted unallocated expenses that were much higher than our annual run rate.

Now let me turn to adjustments to earnings to help you better assess the underlying performance of the business. Pretax adjustments to earnings totaled to a loss of $19 million in the quarter and included restructuring actions in Ratings and corporate. We anticipate that these restructuring actions will result in annual savings of approximately $30 million. Despite strong year-to-date results, we are continuously looking for opportunities to transition to leaner, more effective organizations. In addition, we excluded $24 million in deal-related amortization expense.

In the third quarter, led by Ratings, every business segment contributed to gains in organic revenue. The reported revenue decline in Market and Commodities Intelligence was due to several divestitures. Each business segment reported adjusted operating profit growth. Market and Commodities Intelligence reported a 1% gain in adjusted operating profit as organic growth and synergies more than made up for the lost profitability associated with the divestitures. I'm pleased with the adjusted operating margin improvement in Ratings and Market and Commodities Intelligence. While we'll just discuss indices margins in more detail in a moment, let me just say that we want to invest intelligently in such a high-margin business while simultaneously maintaining a disciplined cost structure.

Let me now turn to the individual segments' performance and start with Ratings. Ratings revenue increased 15%, or 14% excluding a favorable impact from ForEx. Adjusted operating profit increased 19%, while the adjusted operating margin increased 170 basis points to 53%. As we have said in the past, we manage the Ratings business on a rolling 4-quarters basis. And you can see, on that basis, the adjusted operating margin increased 270 basis points. All transaction and non-transaction revenue reported strong growth. Non-transaction revenue increased 7% due primarily to growth in fees associated with surveillance, entity ratings and short-term debts, including commercial paper. Transaction revenue increased 24%, primarily from gains in U.S. corporate bonds, global structured products and European bank loans.

If we look at Ratings revenue by its various markets, you can see the greatest gains were in corporates and structured finance. Bank loan ratings are part of corporates and boosted results in this market. Structured finance increased primarily due to strong CLO activity in both the U.S. and Europe as well as increased CMBS activity in the U.S. The only market that declined was government due to the 90% decline in U.S. public finance issuance that Doug mentioned.

Let me now turn to Market and Commodities Intelligence. This segment includes S&P Global Market Intelligence and S&P Global Platts. In the quarter, the third quarter, reported revenue declined 6% due to divestitures. Excluding divestiture and acquisition activity, organic revenue increased 7%. Despite the loss of earnings associated with divestitures, adjusted operating profit improved 1% due to organic growth and synergies realization. Adjusted operating margin improved 270 basis points, primarily due to strong organic revenue growth, the sale of lower-margin businesses and SNL integration synergies.

Turning to Market Intelligence. Excluding recent divestitures, organic revenue grew 8%. There are 3 primary reasons behind this growth. First, we serve a diverse set of client segments beyond Wall Street, including corporations, banks, insurance, professional service firms and others. Several of these have better underlying growth characteristics than investment banks and investment management. Second, we serve all of those segments, from the largest to smaller companies, and grow our contract values as our clients grow. Third, our renewal rates and sales performance are strong as we enhance the product, train customers and leverage our unique and proprietary content. One area where this growth can be seen is in the number of SNL/S&P Capital IQ and Risk Services desktop users, which expanded 13% year-over-year. Emphasis continues to be on instituting enterprise-wide commercial agreements and combining desktop platforms. Approximately 1/3 of RatingsDirect and Capital IQ desktop businesses have been converted to enterprise-wide commercial agreements.

With respect to combining desktop platforms, 2 events will occur in early November. First, we will launch a production version of the new Market Intelligence desktop for all SNL customers. This will have an updated look and feel, will contain all SNL content and some new Capital IQ content and functionality. Second, we will launch an official beta release of the new combined platform for investment banking customers after just completing a successful preview campaign with selected users.

Looking more deeply at Market Intelligence revenue. All 3 components delivered strong organic revenue growth. Desktop products grew 8%. Enterprise Solutions has been renamed Data Management Solutions, and revenue increased 9%, leading growth for Market Intelligence. Risk Services grew 5%, with RatingsXpress and RatingsDirect providing high and mid-single digits, respectively.

And finally, note that there was $37 million of revenue in the third quarter of 2016 from businesses that were divested.

Turning to Platts. Organic revenue growth ticked higher. After 4% growth in the first half of the year, Platts delivered 6% organic revenue growth in the third quarter. This growth was due to the core subscription business, which grew mid-single-digit, and Global Trading Services revenue, which increased by more than 20%. Derivatives trading was strong at the Intercontinental Exchange in oil and at the Singapore Exchange with iron ore.

If we look at Platts' revenue by its 4 primary markets, you can see that petroleum and power and gas make up the majority of the business. Platts' growth this quarter came primarily from petroleum, which benefited from solid subscription growth and strong global trading activity. In addition, Petrochemicals contributed 6% growth, and metals and agriculture returned to growth, with a strong recovery in Global Trading Services revenues. Please note that there was $9 million of revenue in the third quarter of 2017 from the PIRA acquisition.

Let me now turn to indices. Revenue increased 14%, mostly due to continued growth in ETF assets under management. Adjusted operating profit increased 10%. Adjusted operating margin decreased 190 basis points to 64.3% as revenue gains were partially offset by increased expenses related to performance-driven costs and investments. Performance-driven cost include sales royalties paid to our partners, sales commissions and incentives, and investments include Trucost expenses, expansions in India and Mexico and technology. Asset-linked fees, which are principally derived from ETFs, mutual funds and certain OTC derivatives, experienced the greatest growth in the third quarter, rising 17%, driven by a 31% increase in average ETF AUM. Subscription revenue increased 6% due to growth in data subscriptions and custom indices. Exchange-rated derivative revenue rose 6% with gains in S&P 500 Index options and fixed futures and options activity. The trend of assets moving into passive investments was again very strong in the third quarter, with the exchange-traded products industry reaching net inflows of $124 billion. The quarter-ending ETF AUM tied to our indices totaled $1,214,000,000,000, up 33% versus the third quarter of 2016. As the chart shows, this was the result of $150 billion of net inflows and $150 billion of market appreciation over the last 12 months. The $1,214,000,000,000 was a new record. The third quarter average AUM associated with our indices increased 31% year-over-year, and this is a better proxy for revenue changes than the quarter-end figures.

Exchange-rated derivatives volume was mixed. Key contracts include increased S&P 500 Index options and fixed futures and options activities, which experienced robust activity and a decline in activity at the CME equity complex.

Now turning to our capital position. There was a little change from the end of the fourth quarter of 2016. We now have $2.3 billion of cash and $3.6 billion of long-term debt. $2.1 billion of this cash was held outside the United States at the end of the third quarter. Our debt coverage, as measured by adjusted growth leverage to adjusted EBITDA, was 2.0x versus 2.1x at the end of 2016. Year-to-date, free cash flow was $1.1 billion, of which nearly $500 million was generated during the third quarter. As for return of capital, the company returned $604 million to shareholders in the third quarter, $500 million through an accelerated share repurchase program, with 2.8 million shares received in the third quarter and additional shares expected when the program is completed at the end of October, and $104 million in dividends.

Now I will review our updated 2017 guidance. Based upon strong year-to-date results and our expectations for the remainder of 2017, we have made several changes to our 2017 guidance. This slide depicts our GAAP guidance and the changes that we have made. Please keep in mind that our guidance reflects current spot market ForEx rates.

This slide shows our updated adjusted guidance. The changes are highlighted on this slide. I'm going to discuss the changes to our adjusted guidance, which were as follows: we have increased our organic revenue growth from high single digit to low double-digit growth with contributions by every business segment. We have increased our unallocated expense from a range of $130 million to $135 million to a range of $135 million to $140 million, driven by continued IT spend and higher incentive compensation. We have increased our operating profit margin guidance from a range of 45% to 46% to a range of 46% to 47%. We have lowered interest expense by $5 million to $145 million. And we have increased diluted EPS, which excludes deal-related amortization, from a prior range of $6.15 to $6.30 to a new range of $6.55 to $6.70. Overall, this guidance reflects our expectation that 2017 will be a very strong year for the company.

With that, let me turn the call back over to Chip for your questions.

Thanks, Ewout. (Operator Instructions) Operator, we will now take our first question.

Our first question comes from Peter Appert from Piper Jaffray.

So Doug, the performance from margin perspective continues to be exceptional. And you've addressed this before, but I am required to ask you again. Your confidence in the ability to continue to sustain the kinds of margin improvement you've seen, how much more upside is there? How much has been used up already?

Well, Peter, thanks for the question. We continue to be committed to improving our margins and at the same time while we're investing in the businesses, we think that, obviously, one of the best indicators of improving our margins is to keep growing the top line. We've invested in how we're approaching commercial markets. We've put in place commercial heads of all of our businesses. We're working towards looking at the best ways to penetrate markets and improve our top line growth. But at the same time, we're also committed to managing our expenses in a way that are professional as well as appropriate for our business growth. So we continue to believe that we can improve our margins. We have thought about -- a lot about this, and it's something that we think that we can still do.

And Ewout, I'm just wondering if you've got any -- if there's been any evolution in your thought process in terms of appropriate level of leverage on the balance sheet.

Peter, as you have heard us speaking last quarter with respect to our capital philosophy and targets, that is a new framework we have set out to you, to our investors, that hopefully provides clear guidance on our expectations with respect to capital return, our balance sheet, share buybacks, our dividends and also leverage expectations for the future. What we have said is that we want to be investment grade, overall, and that our adjusted growth leverage should be in a range of 1.75 to 2.25 versus our adjusted EBITDA. This quarter, we're at 2.0, so just at the midpoint of the range. And therefore, we're very comfortable where we are with respect to leverage at this point in time.

Our next question comes from Joseph Foresi from Cantor Fitzgerald.

So you're obviously having a fairly good year here. How do you think about the long-term growth rates and margin profile for the overall business?

Joseph, thank you for that. Let me -- this is Doug. Let me just give you a couple of quick thoughts about that. As I just mentioned to Peter, we continue to look at top line growth as the best way to drive our margin improvement. And we don't have necessarily projections for each segment, but our guidance is adjusted. Our operating margin is about 46% to 47% that you just saw on the slide that Ewout presented. In the Ratings business, over the long run, we aspire to the low 50% range. We're continuing to look at how we can drive productivity through investments in IT but maintain our quality, our controls and our analytical excellence. In the market and commodities space, we've got a 30 -- high 30% margin over the next couple of years. We're continuing to complete the synergy programs as well as the other approach-to-commercial discipline and IT investments as in Ratings. And then in index, we don't really have a specific target in the index business. AUM levels and derivative activities, in some ways, are out of our control, but we are continuing to invest in the business and do target -- in extent we have a target, it's maintained in the same kind of a range, but we're not giving a specific target for the index business.

Got it. That's helpful. And then my second question. Any thoughts on new tax reform that's out there and how it could impact the business going forward?

There's a couple of things on the tax reform. Obviously, if the overall tax rate is reduced, that would -- we would be a beneficiary of a lower rate. We're -- we've been able to have a few of benefits here and there. We're in the 30-ish percent range. We used to be in the more of the 31% to 32% range. But if the corporate tax rate went down to 20%, we would have a very positive impact. There's other provisions which have been mentioned in the past, like nondeductibility of interest expense. We've looked at that carefully to see what that might do to the debt markets. We think that there could be some potential impact to debt markets from that, but at the same time, debt is the most important capital market in United States, and it's a way that corporations finance themselves and provide more leverage and better returns to their shareholders. But these are still -- most of the specific details of the tax reform are really not known yet. And as they become known, we're going to be looking those. But based on what we know now, net-net, we would probably be some -- get some benefit from the tax reform based on the provisions that we've seen.

Our next question comes from Conor Fitzgerald from Goldman Sachs.

I wanted to ask a question on the treasury white paper, particularly some of their comments around the pricing for exchange data feeds. I know the comment doesn't really specifically apply to your business, but you can see there's perhaps some parallel, given it just hits on data businesses with pricing power. Does the white paper change how you think about pricing power in this part of your business at all?

Conor, this is Ewout. Of course, we have taken notice of that report. And overall, our expectation is that those particular proficiency proposals should not impact S&P Global. As you've seen, it's very much in between data providers of equity markets and broker-dealers and the charge of data feeds from the equity markets. We are facilitating some of those through our platforms, but in the end, those are direct relationships in terms of intellectual property between the exchanges and the broker-dealers. So overall, we don't believe that it will have an impact on the company. And therefore, we are very comfortable that the company will have similar growth expectations in the future not impacted by this report.

That's helpful. And then just another one on taxes. If there was a lower tax rate on foreign cash repatriation, how would you think about potentially utilizing that?

Yes. At this point in time, our foreign cash is focused on permanent reinvestments overseas. So that is the starting point. We might reconsider those plans when there is a change in tax provision and there could be a repatriation, but we need to discuss it at that point in time when we have the facts. So it might be that we'll reconsider our permanent reinvestments plans we have today. But we need to see what will come out of the new tax regulation, and we will need to decide at that point in time.

Our next question comes from Ms. Toni Kaplan from Morgan Stanley.

In light of the outsized strength in transactional ratings revenue this quarter, can you just give us some additional color on pricing and share gains? It just seemed like, based on the issuance levels that we had seen that this was a real outperformance.

Toni, let me just give you a little bit of color on the performance overall. Clearly, this was not such a great quarter when it comes to issuance. Global issuance was down almost 7% overall. But as usual, there is a mix balance that we always look at to see where there might be sources of strength for the type of performance we had on the top line. In U.S., the corporates were up about 6.5%. The financial services were up 9%. You know that public finance was down about 19%. But a combination of the corporates, the financial services, what we saw overall with some strength in the public in the -- I'm sorry, in the structured finance area. There was CMBS strength that was up 46% for the quarter as well as a structured credit, which was mostly CLOs. That was up over 100%. So it's really the mix of what we saw that we benefited from. And then as you know, this quarter, we had the first slide we showed you was bank loan ratings because that's been a very positive story for the markets overall. The bank loan market has been strong through a combination of banks' activities with their own balance sheets and then securitizations that go eventually sometimes into the CLO market. And it's a combination of all of that, that has driven our top line growth.

Great. And then in the slides, it showed that the desktop users for Market Intelligence, the desktop users were up 13%, but that desktop revenue itself was only up about 8%. So could you just give us a sense of what the divergence is there? Is it customer mix? And if you could give any color on the desktop client base, like sell side versus buy side, banking versus research or other functions, anything that you can provide there is very helpful.

Toni, let me take the first part of that question. On the first part of the question, as you know, we're slowly moving towards changing our contracts with customers to an enterprise-wide contract, which means that you have an agreement with the organization and they can bring on as many users as possible. So as we move more and more of our contracts enterprise-wide, that means that there are -- you open up the ability for anybody in -- that has an approach to using that license to, to use the product and services. So that's where you see the number of desktops increasing. And it's a good leading indicator for us in the future when we're going to be renegotiating contracts over time that as the usage goes up, it gives us the ability to think about how we can get pricing increases over time on that. Chip has some more numbers specifically about the different segments of who the users are.

Yes, Toni, I don't remember the exact numbers. But a few quarters ago, in our slide deck, we gave you a pie chart which showed you the breakdown of Market Intelligence by customers, and it was roughly pretty evenly split between 4 categories. One of the categories that people don't think about a lot is corporates and others. So the corporates and accounting firms and consulting firms and the McKenzies of the world, a lot of those folks may buy our data, not McKenzie specifically, but those kind of firms. Then a chunk with sell side, a chunk with buy side and a chunk within private equity. So please go look at that chart because I don't memorize the exact figures, but take a peek at that chart.

Our next question comes from Alex Kramm from UBS.

Just staying on that Market Intelligence topic for a second. I heard the 1/3 is now enterprise pricing. And I know there was an earlier question about market data cost in general. When we talk to clients, some of this move to enterprise pricing seems to be driving decent cost increases to the tune of like double digits or so. So just wondering, at what point you're reaching the limit? Or you still feel like you've got good upside? I guess, what we're hearing is that folks increasingly are looking at the cost with you guys and wondering if it's getting a little bit too much. So any comments will be appreciated.

Alex, this is Ewout. So we are very encouraged by the trends of moving to enterprise-wide contracts. As you know, that is an explicit strategy of Market Intelligence, and we think that's good for the customers and good for S&P Global. So let me give you a little bit more color around that. About 1/3 of the previous Capital IQ customers are now converted. The plan is ultimately to continue to bring the whole customer set to enterprise-wide contracts. And we believe that's a good development. Because ultimately, it means that when one of the customers is adding new employees, new analysts, they can all be added to the platform without any additional costs. So it will increase usage. It will increase embedding into the models. We like to see that number of 13% increase in users. We think ultimately more users is always a positive in the long term. So overall, this is an explicit strategy. We believe we provide value for the platform. We look, as you know, from the enterprise-wide contracts very much to actual usage. And we try to make an estimate of the added value for the customers, how much that's embedded into their workflows. So there is a difference with -- between a customer that is looking at more high-level data versus others that go in very deep proprietary intelligence. And therefore, there are some differentiations in terms of the price setting. But overall, we believe that the product is well priced, is competitive in the market, is adding functionality. And that is the main driver behind the growth in users and the desktop revenue.

All right. Fair enough. And then just maybe -- since somebody mentioned the treasury report earlier. I think one of the areas that didn't get a lot of attention was the, I guess, Treasury's push for more securitization. So Doug, maybe for you. I mean, any conversations you've had to that regard with the administration? And obviously, structured finance models haven't been that robust over the last 3 years. I mean, anything that could do or time lines you would think about here if there's really a push to get that going again?

Well, there are 2 aspects to that. The first, in the U.S., there's clearly interest in Washington, and I have no idea what the timing could be for GSE reform, which might eventually change the dynamic of the RMBS markets. The RMBS markets in the U.S. have gotten to be quite small. In the last quarter, there was less than $12 billion of issuance of RMBS securities. So there might be at some point some reform there, but I'm not going to hold my breath for it. On -- in Europe, you know that Mario Draghi has spoken many times about wanting to revitalize the securitization market in Europe. And there do seem to be some progress. You see more structured credit. This quarter, there were $14.2 billion worth of CLOs and other type of structured credit. And you do see some interest in Europe to have a more robust securitization market, particularly because it frees up capital on corporates and banking balance sheet, so that it can be reinvested in other type of activities and as well it provides more inventory for the securities markets and moves away from a more dominant banking market. So I've had a lot of discussions with this with different central bankers and policymakers, but there's no specific plans that I've seen. And in the U.S., the biggest market could get unleashed if you saw the RMBS market opening up again, but I don't see any time line for that.

Our next question comes from Hamzah Mazari from Macquarie Research.

I was hoping you could address how investors should think about your business and any net benefits post MiFID II. Is that something that you guys benefit from? Historically, you haven't talked a lot about that. Some of your peers have. So just curious there, first.

Thank you, Hamzah. Well, first of all, when it comes to MiFID II, we are obviously looking very carefully at this. There are sort of different ins and outs on this. And there's a lot of new discussions about this today related to how the U.S. players are going to be able to deliver intelligence and research into the European market. So first of all, from our point of view -- direct point of view, we're providing research and data and analytics that is already paid for with hard dollars. When we -- when somebody gets a subscription to our products and services, they're already paying for them with a -- through a subscription that is paid for with hard dollars, euros, pounds, whatever the currency is. And we're not part of the unbundling move that's going to take place from the institutional sell-side research analysts that are now typically wrapped up in a -- in their soft dollars, which is part of a trading credits or some sort of a trading system. So from a direct point of view, we don't think that we're going to see any impact to our business. Second, as the market does become unbundled and you see new ways for research to be delivered, our platform at Market Intelligence can be used by the investment banks to deliver research. And we can do it in a way that we're able to track usage. We're able to track how many times different reports are opened, so that they can be charged. We can setup subscription approaches. And we can do that and reach all of the different types of investors and analysts that are using the kind of research they have today. Clearly, the biggest question that's been coming up when I meet with you and your colleagues and peers is that, "Will there be any kind of a negative impact on the research budgets?" And we don't know if that's going to -- what sort of a potential negative impact it could be if there's a squeezing of research budgets and organizations have to look carefully about how they want to spend their hard dollars over time, and if there's going to be any negative impact there. But generally speaking, we're watching this very carefully. We're going to understand what it means for us, but there is no direct negative impact initially.

Great. And just a follow-up question. Curious how investors should think about the Platts business in an up cycle relative to past cycles. And the reason I asked that question is you've done a ton of acquisitions in that business. It's more diversified. You probably have more supply-demand data that you didn't historically when that acquisition was done. So maybe help us understand, in a stronger oil and commodity market, I know you mentioned the business ticked up, but could growth be similar to the numbers that business put up in the last up cycle? Granted, we don't think energy is going to $100 but -- oil going to $100, but just curious. Any thoughts there?

Well, first of all, our expectation right now for oil is that it's going to be in a range somewhere in the $50 to $60 range. But let's say $45 to $60 is the expectation that we have right now. At $45, you see people pulling up production. And when it gets into the mid-$50s, people -- I mean, sorry, when you get down to $40, in the low $40s, people stop producing. Get into the $50, $55, $60, people start producing more. You get more supply coming in. So we've seen this dynamic recently of a much more stable oil price. We've been growing a portfolio of services that can allow us to provide all the way from the exploration in the wellhead to the refinery on to the product, with a combination of crude oil analytics, of refinery analytics, of shipping, et cetera. And we're just starting to see the promise of putting those businesses together to start growing. So we think of Platts, over time, in a couple of different buckets. One is obviously the different asset classes themselves, petroleum, natural gas, energy, plastics, petrochemicals, et cetera. And then the other is pricing and GTS, the Global Trading Services. And then secondarily, the trade flow analytics and data products. And we are investing in all of those to see if we can grow our subscription businesses over time and make this as one of our growing businesses. But we do see this stability should be beneficial to the business, but I can't necessarily forecast what that's going to mean for us in the future.

Our next question comes from Tim McHugh from William Blair.

Just one for me, I guess. On the index, you talked a little bit about the margins. But can you elaborate a little bit more? I know you're trying to stay in somewhat of a range, but it seems like we've seen kind of this second year a little bit more investment. And they seem rational, but I guess can you talk about, from here, the kind of the -- should we see leverage from this point? Or do you see a sustained period of wanting to invest in new products and, I guess, the infrastructure of the business?

Tim, this is Ewout. So let me first tell you about the big-picture perspective we have on this business, and then I will provide a little bit more color. So overarching, we think if we can grow a business that has margins mid-60% range, mid-60% by 14% revenue growth during a quarter, that's a very good development and that creates a lot of economic value for our shareholders. Our specific reasons why there was a 190 basis points decrease in margins for indices this quarter, the first reason is the addition of Trucost. When we acquired Trucost last year, that's of course a lower-margin business, so just the addition of Trucost, on average, is driving the margin down. But really, that's a good investment and a capability that will help future growth. And secondly, there are some volume-related expenses. Think about certain royalties we have to pay, where there is a revenue element on the one hand, but then an offset on the expense line with respect to the royalty. So that is also having a slight impact on margins. But taken altogether, we believe that this is a business that we are able to grow in the future still at that mid-60% margin level in a very healthy way. So certainly, we expect to continue to do that. And we will invest intelligently also in future growth in the indices business.

Our next question comes from Manav Patnaik.

My first question is, I guess, around in the Platts side. And Doug, you pointed out the LNG product and the growth there. And then in the Platts, sort of breakout side, we saw power and gas, I think, decline 1%. And my guess is LNG is a fast-growing area, but there's maybe some other offsets there. So just a broad question on could LNG be a material contributor to that business, drive some more growth there? Just any thoughts there would be appreciated.

Manav, we look at the LNG business as one that's -- this is really a long-term investment for us. I don't know if I could say that the contributions are going to be high over the next few quarters. I don't even know how long it will take to get there. But when it comes to development of a global market, this is one that we are investing in because we think it will become a significant global market. If you go back just about 2 years ago, the price of a BTU of LNG was $4 in Louisiana and $16 in Japan because there was no way to unify the markets through LNG. But as the LNG terminals get built up around the world, both for liquefaction and deliquefaction, in particular with Korea and -- South Korea and Japan being the 2 largest importers over time, we really think this will develop into a global market and we'd like to be on the ground floor. So right now, we see it more as an investment market, where we're buying the right kind of -- and building the right kind of capabilities to serve this market. And over time, it should get bigger and we hope it becomes sort of our areas of growth.

Got it. And then just on the bank loan ratings. I guess, it's the one side of issuance that's hard for us to track. So I was hoping for some color in terms of how penetrated you think you are in that market. And I know it's been lumpy in the past. Just any help on how to think of it in the next -- in a couple of quarters at least?

Yes. So on the first quarter call, we shared some statistics with you. And once again, I don't -- I'll paraphrase what I think they were. But in the U.S., say, 4 or 5 years ago, we were above 54%, in the first quarter we're around 93%. And then when you got to Europe 3 or 4 years ago, we were down around 40%. It got up to around 70%, somewhere in there. But I encourage you to go look at that first quarter slide. We might share that slide again. I didn't feel like putting it in there every quarter, but at least give you sense for the -- really the big share gain. Not taking share away from a competitor, but just that more and more of these bonds -- I'm sorry, more and more of these bank loans are rated.

One of the things I would also point out. It's not a science what I'm going to tell you, but it is -- it's a way that the bankers as well as the issuers think about it. If you look at a combination of bank loan rating of high-yield bond proceeds and CLOs together, you get a pretty good picture of what's happening in the high-yield markets because there are substitutes. Somebody could go to the bond market. They could go the bank loan market and they could also -- the banks could securitize their loans into CLOs. And we look at those different volumes. That's what -- that's the way I look at the overall high-yield market, its different pieces. And clearly, with the liquidity in the banking market, in particular, in Europe, and then in the United States with the access to the CLO market for banks. And then, there's a lot of investors who have also been interested in floating rate exposure as opposed to fix rate exposure, especially over the last few quarters. It's a combination of all of those factors that has driven such high activity in the bank loan rating market. And we do believe that we have good penetration there and that we are one of the rating agencies that's a go-to rating agency for that type of activity.

Our next question comes from Anjaneya Singh from Crédit Suisse.

First, on margin performance in Market Intelligence, up nicely year-over-year, but flattish as we've been progressing through the year. So in light of the synergy capture opportunity that you folks have in that segment, can you talk about what's limiting the sequential margin expansion there? And any update on how the removal of some of the redundant costs is progressing?

This is Ewout. Overall, we believe that there is a lot of opportunity to further expand the margins in Market Intelligence. You have seen very healthy growth with respect to revenues. So that is one side of the story. And we believe -- we were talking before about the active users on the platforms. Ultimately, that will help to drive up the revenues of the desktop in the future. Secondly, we believe there is opportunity for efficiencies. We're still working on the SNL integration. We will get back to you with an update at year-end where we are with those synergies, but we have all the reason to believe that we will be able to hit the targets with respect to synergies we put out to you at the point of the acquisition, but also at the beginning of this year. Lastly, if I look at the overall year-over-year trailing 12 months margin improvement, I'm looking at 420 basis points margin improvement year-over-year. So we think that is a clear indication that we are on the right track. Again, growing the top line harder and higher than the expense line in the future will continue to drive the margins up.

Okay. Got it. And as a follow-up, I was wondering if you can share any updates on Project Simplify as you folks are moving to more of deploying pilots. Are you seeing any tangible improvements? Just trying to get a sense of whether the initiatives are starting to bear fruit on the efficiencies? Or it's still a little early to see them in your results?

I -- what I would say is that it's 2 answers. The first answer, when it comes to progress on getting Project Simplify in place, we are making excellent progress with rolling it out across the different practices. And at some point, we're going to be moving into the largest practices, where we're going to be rolling this out. So up until now, the philosophy of simplification of standardization of it -- of building and embedding controls and thinking about an end-to-end data collection all the way to the publishing process has been really good work. And the overall design progress, the piloting progress and how we're moving has been quite good. When it comes to seeing financial impact on it, it's starting to leak in. It's not a big driver of expense saves right now. But over time, it's something that will start becoming more significant. But as of now, it has not been an important driver of expenses going down.

Our next question comes from Jeffrey Silber from BMO Capital Markets.

I get one question that investors ask a lot, I'm going to paraphrase that. Hopefully, you can help us out. So -- and I hate to focus on margins again, but that seems to be the theme today. Specifically looking at your Ratings business, you said your long-term goal is in the low 50%. You're already ticking over 53% year-to-date. Now you mentioned margin expansion continues based on revenue growth. You've had some really strong revenue growth this year. If we kind of go back to a normalized environment, do you think it's possible that margins could actually go down if you continue expanding in the Ratings business? Again, long term, I know where you're heading. But maybe next year, would it be possible to take a step back before taking a step forward?

That's -- Jeff, this is Doug. That's, in a sense, a little bit of a theoretical question. But the mid-50s -- the low 50s is a medium-term goal, not necessarily a long-term goal. Clearly, there are flows of issuance that we benefit from. Sometimes, when there's higher flows, we're going to benefit from them as the part of our revenue stream, which is a transaction-based revenue. And from the point of view of if there's a quarter that doesn't do very well, and I -- you've heard me say this many times before, that we could easily see a quarter or 2, or even more where there's weak issuance and our top line is not as strong as it has been and the mathematical calculation of that could lead to a lower margin. So theoretically, to your question, you could see a lower margin. But when it comes to how we manage our expenses and how we're managing our business overall, we're very conscious of improving our performance, improving our margins. But theoretically, from your question there, there could be some quarters that top line growth is very weak and it could hit our margin.

Jeff, if I may build on Doug's answer. The other side there is we are staying very tight and disciplined with expenses. So particularly, in this period, with revenues going up, we don't want the expense line to go up too much. As you have seen, we have even announced a restructuring in Ratings at this point in time. So the benefit of that is when there will be some headwind at some point in the future that we have an expense base that can withstand that in a healthy way. So certainly, I wanted to add that particular point, that on the expense side we continue to be very disciplined and that should help in a theoretical scenario as you described.

Our next question comes from Bill Warmington from Wells Fargo.

So a clarification question on some comments that Ewout had made on the Market Intelligence piece. The -- when you mentioned that about 1/3 of the Cap IQ base had now converted over to the enterprise-wide contract, I just wanted to understand is that specifically just an enterprise pricing model? Or is that the enterprise pricing model including the combined SNL as well? And part of what I'm curious about is, what percentage of the Cap IQ clients who are offered that option have taken it?

So -- and make sure we're clear -- make sure -- the product has not been combined yet. Just the commercial agreement, okay? All the SNL clients were already on enterprise-wide. So they were already there. So as we then worked through our Cap IQ customers, some of whom are also SNL customers and some of whom are not, that's what we're referring to as the 1/3 that have made it so far. It's not really a question of acceptance or their choice. Because in the future, there will only be one commercial offering, one product, a combined product. So we have to get to one commercial offering. It's really not a choice in the future. So we're just working our way through it. I'm not sure -- does that answer your question, Bill?

Yes, it does. And then one other question on the Ratings side. Just wanted to ask how much of a factor has first-time issuers been in the strength that you've been seeing? And I don't know how much that applies to the bank loan issuance in terms of new issuers versus guys who are refinancing over the past 9 months, but I wanted to ask that question.

I think where you see it -- I don't have the numbers at my fingertips, but there's one way you can see it kind of in a proxy is to go back to our slides and look at the part of our Ratings, which is what was transaction revenue versus what was -- let me just find that slide a second -- yes, so if you look at on Slide 26 of our slides, the nontransaction revenue increased 7%, and that is driven partially by the new issuers that come on, that pay us for entity ratings. And so that would be the one area I'd say that you could look at for proxy. Otherwise, I think it'd be better if Chip followed up with you later with some more specific data on that question.

Our next question comes from Craig Huber from Huber Research.

Two questions. First one, can you just talk a little bit further about maybe the assumptions behind, I think, your comment early on, Doug, about global debt issuance up 1% or so in 2018? What is your, sort of, thought there behind where credit spreads might be in that scenario? The yield curve? How much that might go up over time? What's your expectation behind that with GDP? Does that pick up significantly from here? Obviously, there's a huge refinancing wall through the next few years. And how do you sort of get to that 1% number? My first question.

Okay. Yes. So thanks for that. First of all, this is something that our fixed income research team in Ratings, they do this report a few times a year. And the basis of this report, it's a combination of an analysis of what is the refinancing pipeline. So what we're seeing in terms of maturities that are coming through and all the different bond markets around the world. It's also a combination of looking at what the expectations are for growth in the world. And there's one big wildcard this year, which is something I mentioned in my prepared remarks about monetary policy and what kind of impact that could have. So just in terms of a couple of the key components. First of all, when it comes to issuance forecast in 2018 overall, it's for about a -- basically flat. Let's call it overall flat, even though it might be around about 1%. But generally speaking, it's flat. It's a combination of looking at financial services issuance, which is going to be up about 5%, structured finance up about 5%. U.S. public finance down about 7%. And then overall, globally, corporates should be down a little bit based off of the maturity profile that's out there. And as a result of that, you see that the overall forecast is, as I said, flat, up maybe about 1% to 2%. When it comes to GDP growth rate, our team is forecasting GDP growth rate next year on the global scale of about 3.6%, with the U.S. in the low 2s, around 2.2%, 2.3%. We are also expecting that there will be 3 25 basis point interest rate increases in the U.S. as the U.S. Federal Reserve starts to normalize monetary policy further. And that -- that's also something that's going to play in the market. We don't necessarily think that there's going to be an increase in December, but that those 3 will most likely be next year. And that in Europe, there might be a slowdown or a potential taper of the purchase of bonds in the European market. So again, these are all of the different factors that we look at, maturities. We look at what's happening with -- overall with the interest rate, the base rate interest rates and the global market expected growth. And the growth in the global economy is actually pretty good right now. There's only 6 countries around the world, including Venezuela, that are not growing. And it's been a long time that you've seen sequential coordinated growth across the entire global economy, especially after coming out of financial crisis. So all of those generally give us a pretty positive or benign to positive environment. And we look at that when we're preparing these forecasts.

My other question, Doug, I think you mentioned earlier on that for the third quarter global issuance, that you guys, I guess, rate, I believe, is up -- down 7%, yet your revenues -- or transaction revenues are up 24%. Can you just talk a little bit further about the mix issues? Why you outperformed on the revenue side so handedly, please?

Yes. So first one, we talked about, and we were very specific about this quarter, was the bank loan ratings. And that's something that you don't -- when we talk about issuance, we're not including the bank loan rating market. That's a -- when we talk about issuance, we're talking about fixed income instruments that are issued by governments, by financial institutions, by corporates, by municipals, et cetera. And so the first -- really, one of the important elements was the growth in bank loan rating. The second is, in terms of the mix, when -- sovereigns, as an example, are down about 11%, but we don't get a lot of income from sovereigns. It's not an area that drives a lot of our income growth. In addition, there's -- industrial side was up in the U.S. The corporate issuance was up 6.5%. And that for us is one of the key drivers. It's -- the corporates are those that go to market. They pay us the ongoing issuer fees as well as how they're going to market. There's also an addition, maybe the commercial paper market was strong in the last quarter with a lot of issuance there that maybe again hasn't really picked up. But think about, for us, the industrial corporate markets in the U.S. were up 6.5%. Financial services up were 9%. And despite the downturn in Europe, in corporates and financial services, we were -- those were offset by the U.S. issuance. And then secondarily, CMBS and CLOs were up in both markets, in the -- in Europe and the U.S. So if you think about the components, corporate issuance, financial institutions issuance and the world's largest capital market, U.S., and then structured finance issuance in Europe and the U.S., both in CMBS and CLOs, both of those up. Those are the components that drove the increase despite the total market being down.

We will now take our final question from James Friedman from Susquehanna Financial Group.

I think most of my questions were answered, but I did want to follow up about that Slide 9, Doug, about the banner year for bank loans. I know you had a lot of questions about it. But you guys have been consistent with this as a theme since the first quarter. I guess, my question is, it's a little bit difficult to parse what is your gain in market share versus, say, the cyclical versus maybe importantly, the structural growth in this end market. I was wondering if you could help parse that between Europe and the U.S. We're trying to evaluate how sustainable this is. And clearly, you made a lot of progress since 2010 on this slide. But we're trying to anticipate how this is going to look going forward.

I -- first of all, thank you for the question. If you look at the -- instead of Slide 9, if you look at Slide 10, this gives you a view of what are the maturities over the following 8 years or next 8 years at the end of each of these periods. And that, I think, is a way to look at what is the potential growth of this market. I'm not going to say that you can ever predict what's going to happen in the future. But this just gives you a view of -- in 2011, when I joined the company, I could see from having worked in a bank that the bank loan market was going to actually expand. And we put a major focus on this in 2011 when I joined the Ratings business because I knew from -- coming from the banking world that this is going to be a major focus of the banks given the kind of capital allocation and risk capital approaches that were being imposed from the regulators. And so we've seen now that over the last 7 or 8 years, we've seen 11% CAGR growth in what you'd consider to be the maturities, if you want to call it that, the next 8 years' worth of maturities. The mix of this -- this is the U.S. leveraged loan market on the slide. So this doesn't give you the European piece of that. But the European piece of this, we look at it as the markets get more sophisticated and as the bank loan market gets more sophisticated, that benefits us with the CLO market as well as bank loan ratings. But also as those -- many of those bank loan ratings turn into issuance, they move from a bank loan into a bond issue. That also benefits us as well. And remember, one other thing, typically, the leveraged loan market are a BB+ or lower-rated issuers, which is the noninvestment grade or the spec-grade type of issuance, which is also one where we typically get a better type of a fee profile than the investment grade. So we look at this overall as a really important area for us to stay close to, to watch the evolution and the mix between the different types of markets, loan markets, CLOs and noninvestment grade. It's -- I think it's all kind of wrapped up into one broader type of noninvestment-grade market. And we think that one of the really good stories the last few years has been the leveraged loan market.

And I think what we'll do in the fourth quarter is resurrect that first quarter slide that shows the market shares since several of you have asked about that. So we'll resurrect that chart in the -- in our fourth quarter, so you can get a sense of that. The only thing I want to add is, the underlying reason why these things are rated, okay? If a bank worked to keep the loan on the books for the life of the loan, they wouldn't need to get it rated. But if they want the flexibility to get that loan off of their books, maybe wrap it up as CLO or sell it off, then having a rating is very, very beneficial to them. So I think this is an understatement -- important to understand the logic behind why it occurs as to whether that will occur in the future.

Okay. James, any more questions from you?

No. That's it for me.

Well, let me close the call by thanking everyone for being on the call today. I think that consistent overall with how we've been doing this year. We've delivered another very strong quarter. And as you've heard throughout from our commentary as well as the questions and answers, we're committed to continue to improve our margins. It's something that is important to us to have expense discipline, but at the same time also deliver high-quality, highly valued, relevant products to the markets, whether it's things we've talked about over the years, the strengths we already have in indices, in commodities, in Market Intelligence and Ratings, or it's areas that we've started growing in related to supply chain analytics in the energy industries, whether it's the ESG products and climate and green evaluations areas where we also see a lot of relevance for us to create new standards as the markets continue to evolve. We thank you very much again for all of your questions, and we look forward to interacting with you as we approach to the end of the year. And we will be back on this call in about 3 months. Thank you very much.

That concludes this morning's call. A PDF version of the presenters' slides is available now for downloading from investor.spglobal.com. A replay of this call, including the Q&A session, will be available in about 2 hours. The replay will be maintained on S&P Global's website for 12 months from today and for 1 month from today by telephone. On behalf of S&P Global, we thank you for participating and wish you a good day.