March 12, 2021

What plans does DBRS Morningstar have to drive market share?

In Canada, where DBRS Morningstar enjoys market-leading positions in the areas of corporate, structured, covered bonds, financial institutions and sovereign related credit ratings, we have capitalized on broad investor acceptance and a widely recognized brand. Our success continues to be driven by our local expertise, existing market presence, and extensive track record. Continuing our relevance in Canada will require expanding into credit markets that are important to local issuers. DBRS Morningstar is also well positioned to serve our top Canadian clients as they operate in new geographies. As issuance trends materialize, we have the expertise and resources to remain the leading credit ratings provider in Canada.

Beyond Canada, the three large legacy credit ratings agencies enjoy safeguards against new entrants in existing market segments, especially when bond issues are larger, public, and recurring. However, when the market seeks ratings on smaller, private, or transactional issues, all registered credit ratings agencies have the opportunity to compete. These are the focus areas where DBRS Morningstar has been highly successful to date in expanding its footprint and where we will continue to further accelerate our market presence.

In Europe, for instance, DBRS Morningstar is able to gain share as an alternative to the legacy credit ratings agencies because we are recognized as an eligible credit rating agency with global investors and central banks. We are also referenced in government lending facilities. As such, from this established position, we are focusing on increasing our acceptance further and growing into segments of the corporate markets, where switching costs are higher because of the recurring, relationship-based nature of the engagements.

In the U.S., we see attractive opportunities for DBRS Morningstar to pursue share gains in both structured finance and the corporate middle market. Our ability to specialize in emerging asset classes is among the factors that help us in competitive market segments in U.S. structured finance, and we believe that our timeliness, ability to adjust to volatile market conditions, research, thought leadership, and data credibility are additional factors that investors and issuers use in their selection process. Competitive rivalry is particularly strong in U.S. corporate credit ratings, where the three large legacy credit ratings agencies concentrate. However, private placements, debt funds and middle market issuers require investor-driven ratings solutions in private debt financings. As such, we are leveraging our 45-year experience in assessing complex corporates, our more-granular pricing model, and our local expertise to build our presence in the U.S. corporate middle market sector.

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