Standard & Poor’s parent McGraw Hill Financial Inc. (MHFI:US) and Moody’s (MCO:US) Corp. are recouping losses from the worst financial crisis since the Great Depression as shares of the companies flirt with record highs amid surging demand for corporate-debt ratings.
McGraw Hill, owner of the largest credit grader, rose 0.3 percent to $71.32 today, needing to increase 0.9 percent to reach its all-time closing high of $71.96 in June 2007. Moody’s, the second-largest rater, climbed 1.7 percent to $72.42, 3.3 percent away from its end-of-day peak of $74.84 in February 2007. Shares of both companies will surpass those peaks, with McGraw Hill rising (MHFI:US) to $76.40 and Moody’s climbing (MCO:US) to $76.50 in the next 12 months, according to the average estimates of analysts surveyed by Bloomberg.
The credit-ratings firms, both based in New York, have rebounded as companies take advantage of Federal Reserve monetary policies that have funneled more than $3 trillion into the financial system while keeping the central bank’s benchmark lending rate at almost zero since December 2008.
McGraw Hill, which touched an intraday record high of $74.37 on Oct. 24, traded as low as $17.15 in October 2008. Moody’s, which reached an intraday peak of $73.90 on Oct. 22, traded as low as $15.41 in November 2008.
With companies raising a record $4 trillion globally last year, corporate-finance grades made up 33 percent of ratings revenue at Moody’s in the third quarter, up from 16.5 percent at the end of 2008, according to data compiled by Bloomberg. S&P doesn’t break out its ratings segments.
Borrowing costs for the most creditworthy to the riskiest investors have averaged 3.47 percent this year, below the 10-year average of 5.06 percent, according to the Bank of America Merrill Lynch Global Corporate & High Yield index.
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