March 12, 2021

DBRS revenues looked flattish on an organic basis in the fourth quarter of 2020. Can you discuss the results within the context of where DBRS plays in the credit rating markets?

DBRS Morningstar revenue was relatively flat in Q4 compared with the same period in 2019 as issuance volume slowed across global structured finance asset classes, particularly in the U.S. in mid-November. Industry trade group, SIFMA, reported a 76% year-over-year decline in issuance volumes of U.S. non-agency mortgage securitizations during the quarter, which held back growth across the industry. In contrast, DBRS Morningstar revenue benefited from stronger issuance activity across U.S. CMBS and RMBS and across European structured finance asset classes in late 2019.

DBRS Morningstar’s overall performance in 2020 highlights the benefits of a global and diverse credit ratings business. Corporate credit issuance reached record volumes in 2020, and the strength of our Canadian business, where we enjoy a market-leading position, offset softer issuance and periods of market volatility in structured finance in the U.S. and Europe. Likewise, we witnessed strength in investment grade and middle market corporate issuance outside of Canada, two areas where we are making investments by adding new U.S. and European-based analytical resources.

Overall, we are confident in the increasing role DBRS Morningstar plays in the global markets. We intend to expand our corporate ratings footprint and will continue to invest in the global structured finance markets related to both traditional and non-traditional assets. While beneficial in its own right, these investments also provide a stable path towards adjacent growth in the ratings delivery and fixed income data markets. The credit analytics and data market sectors are known for recurring revenue with reduced exposure to the issuance volatility of the debt capital markets.

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