Moody's Corporation: Balancing Credibility and Innovation in Credit Ratings
DOI:
https://doi.org/10.5281/zenodo.17719341Keywords:
Issuer-pays model, Data governance, Analytics diversification, Credit ratings, ESGAbstract
Credit rating agencies play a crucial role in global capital markets by translating complex issuer risks into actionable credit opinions. This case focuses on Moody's Corporation, which operates two complementary business lines: Moody's Investors Service, issuing credit ratings for sovereign, corporate, and structured finance instruments; and Moody's Analytics, providing data and risk solutions to diversify revenue streams. The case highlights managerial challenges in sustaining credibility amid cyclical issuance volumes, integrating Environmental, Social, and Governance (ESG) factors within ratings, and managing scrutiny over the issuer-pays model. It discusses ongoing modernization efforts in analytics and workflows, supported by data governance and methodological transparency. The case outlines a strategic roadmap accentuating data discipline, selective automation, and maintaining trust while accelerating responsiveness and sector coverage. It draws on academic and policy literature related to credit rating incentives, global oversight frameworks, and evolving investor expectations, emphasizing the importance of balancing innovation with governance.
