Q2 2021 S&P Global Inc Earnings Call
Good morning.
Welcome to S&P global.
Our second quarter earnings conference call.
I'd like to inform you that this call is being recorded for broadcast.
All participants are in a listen only mode. We will open the conference for question and answers after the presentation and instructions will follow at that time too.
To access the webcast and slide.
So 2 investor Dot S P global dotcom.
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I would now like to introduce Mr. Chip Merritt Senior Vice President of Investor Relations for S&P Global Sir you may begin.
Thank you for joining today's S&P global second quarter 2021 earnings call presenting on today's call are Doug Peterson, President and CEO, and Eva Greenberg Executive Vice President and Chief Financial Officer.
We issued a news release with our results earlier today, if you need a copy of the release and financial schedules they can be downloaded at investor.
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Before we begin I need to provide certain cautionary remarks about forward looking statements except for historical information. The matters discussed on today's conference call 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.
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.
Qs and other periodic reports filed with the U S Securities Exchange Commission.
In addition, as announced late last year, S&P Global and I just market entered into a definitive merger agreement in March shareholders of both companies overwhelmingly voted in favor of the merger.
The merger is pending regulatory approval and we currently expect to close in the fourth quarter of.
'twenty 1.
This call will touch on the merger, but does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities nor shall there be any sale of securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to the registration or qualification under.
The securities law of any such jurisdiction.
No offering of security shall be made except by means of a prospectus meeting the requirements of second 10 of the Securities Act of 1933.
In connection with the proposed transaction is to be global not just market had filed a registration statement on form S..4 with the SEC, which includes a joint proxy.
2000, and a prospectus.
That's to be global not just market have found other documents regarding the proposed transaction with the SEC.
Investors and security holders of S&P global or IHS Markit stock are urged to carefully read the entire registration statement and joint proxy statement prospectus, which is available on our website and SEC.
Dot Gov.
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.
Earnings release on the slot.
<unk> contain exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U S. GAAP.
This call, especially the discussion of our outlook contains statements about expected future events that are forward looking and are subject to risks and uncertainties.
Factors that could cause actual results to differ materially from expectations.
Found in our filings with the SEC and on our website.
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.
Can be if we do have some media representatives with us on the call. However, this call is intended for investors and we would ask that questions from the media be directed to Ola thought of Huntsville at 2.1 to 438 to $2.96.
At this time I would like to turn the call over to Doug Peterson Doug.
Thank you chip welcome to.
Today's earnings call at the beginning of the quarter, we knew that the earnings in the second quarter of 2020 had been very strong due to a surge in liquidity driven investment grade issuance and from management actions, we took to reduce spending to deal with the incredible uncertainty from the Covid pandemic, it's remarkable that the financial results we reported today surpass.
But those of a year ago.
These results don't just happen our people make them happen and I want to thank them all.
Now, let's turn to our second quarter financial highlights, we reported very strong financial results with revenue, increasing 8% and all 4 businesses delivering revenue and adjusted operating profit growth.
Pat indices delivered the strongest revenue growth based on the large gains in ETF AUM.
Adjusted expense growth was higher than normal at 9% largely due to significant cost controls in the prior period due to the pandemic and increased performance related incentives this quarter.
After raising guidance on our first quarter.
This call, we're raising 2021guidance again based on these strong results on our expectations for the remainder of the year Eva will provide details in a moment on.
I'd also like to share some additional highlights from the second quarter. The most important initiative as the year continues to be our upcoming merger with IHS market. This is an incredibly trends.
Transformative opportunity for our company and our customers momentum for the merger with IHS Markit continues to build countless employees from both companies are working together on numerous integration planning work streams.
We continue to engage with global regulators in anticipation of closing the merger in the fourth quarter of 2021.
While we don't have any new updates on the merger to share with you today I can assure you the considerable progress is being made.
The iconic Dow Jones industrial average celebrated 125 years this quarter and we introduced several new ESG related products will provide further details on these accomplishments on today's call.
And finally crystal named Amish meta as the new managing director and CEO effective October 1 Amish join Crisil is president and Chief Financial Officer in 2014 and assumed his current responsibilities as chief operating officer in 2017 is over 2 decades of diverse experience across.
Communications oil and gas and business Advisory services Amish will succeed <unk>, who has decided to move on to set up her own venture over the last 6 years Usher as led crystals transformation to become a leading agile and innovative global analytics company under her leadership Crystal has not only can.
Consolidated its ratings leadership position, but also grown its global business.
Issue has been at the forefront of the ESG agenda for Crystal and the launch of several new offerings and platforms in India on the global markets.
I'd like to express our deep appreciation of issues leadership and contributions.
To recap the financial.
<unk> for the second quarter revenue increased 8% to $2.1 billion, our adjusted operating profit increased 8% and our adjusted operating profit margin declined 40 basis points to 58, 3% as you know we measure and track adjusted operating profit margin on a trailing 4 quarter basis.
<unk>, which increased 90 basis points to 54, 5%.
As a result, our adjusted diluted EPS increased 6%.
Each quarter, we highlight a few key business drivers and important projects underway. This quarter, let's start with ratings bond issuance trends during the second quarter global.
This issuance decreased 9% in the U S bond issuance in aggregate decreased 19% as investment grade decreased 51% high yield decreased 8% public finance decreased 7%, while structured finance increased 229% due to large increases.
The bond every category, particularly C L OS which increased 580%.
European Bond issuance decreased 11% as investment grade decreased 32% high yield increased 104% and structured finance increased 74% with gains in every asset.
Classic, except a b S of particular note were clo's, which increased more than 300%.
In Asia bond issuance increased 8% overall the data on this slide only depicts bond issuance will include bank loan volumes overall global issuance decreased 2%.
1 of the.
The first questions investors ask whenever there is a strong quarter of issuance is how much of this was pull forward on this slide we show the profile of bond maturity data from different points in time as you can see the upcoming maturities in the second half of this year and in the next few years have not changed much in the past 6 months so despite.
Flurry of issuance in the last few months there doesn't appear to have been much pull forward activity.
Since bank loan ratings are an important element of ratings revenue and they're not included or bond issuance slide we'd like to disclose our bank loan rating revenue each quarter. The bank loan market continues to see strong demand amid the reopened.
Turning of the economy, and the vaccination rollout as potential inflation puts the floating rate asset class and focus with an incredibly strong CLO market and retail investors continuing to pour money into loan Etfs and mutual funds. The market is easily digested. These elevated volumes in fact assets.
Spite their loan funds jumped to an 18 month high at the end of June all of this has contributed to an unprecedented level of bank loan rating revenue. This year with the first half of 2021 already exceeding all last year set.
Second quarter revenue was $157 million more than triple the second.
Quarter of 2020.
The next 2 slides look at the combined high yield issuance in leveraged loan volume for the U S and Europe did is not readily available for the rest of the world. This slide shows that the combination of global leveraged loan and high yield issuance in the first and second quarters of 2021 has dramatically exceeded any.
Liberal early total in the past 3 years.
This slide depicts the combination of high yield issuance in leveraged loan volume by the use of proceeds of the funds raised the category with the largest increase in the second quarter was M&A and LBO activity.
The leveraged loan market on the CLO market are dependent.
On 1 another as many of the leveraged loans and up in CLO. The CLO market continues at a torrid pace in the second quarter investor demand for floating rate investments their search for yield and the relatively strong CLO performance. During the 2020 pandemic have contributed to increased CLO issuance this year.
Any there not a lot of companies in the world still selling a product. They created a 125 years ago, but on May 26, 18, 96, the Dow Jones Industrial average was launched still serving as wall Street's bellwether at the end of $2020.37 billion of ETF AUM was indexed or benchmark.
Against this iconic Dow Jones index.
At the time of the Dallas introduction investing in the stock market was considered highly speculative activity and so on its early years, the Dow achieve little prominence outside of Wall Street. Ironically. It was the market crash of 1929 that brought the dow's reputation to the attention of.
Every day investors as the index lost nearly 30% of its value over the course of 2 days.
Before that investors had been more focused on their individual stocks, but after the crash investors were more interested in following general market conditions, the Dow made that possible.
Each year S&P Dow Jones indices.
This is the annual survey of assets. This chart depicts the highlights of that survey for 2020.
Asset levels and actively managed funds that benchmark against our indices increased 23% to 11.4 trillion dollars.
Assets in passive funds invested in products indexed to our indices increased 17.
Percent to 7.5 trillion dollars.
Numerous indices support the 7.5 trillion dollars, including the S&P 500, the largest with 5.4 trillion dollars in assets. There are several other notable categories with considerable <unk> growth, including sector indices have increased 24% global indices has increased.
62% and fixed income indices, which grew 86%.
Just over a year ago, we featured the launch of the S&P global marketplace on our earnings call today I'd like to share with you. The tremendous reception. It has received by our clients.
The site currently features a 139 titles of Khan.
Content and solutions, representing all 4 divisions and can show.
So far we have booked 189 deals and there have been 600000 page views. We also recently launched marketplace workbench and partnership with data bricks, allowing clients access to a modern cloud based platform for big data.
An analysis. This slight also depicts the most popular categories and the client types with the most active users.
Congratulations to all those involved in creating a site that uses unique technology to simplify our clients ability to identify access evaluate and utilize unique data and solutions. If you haven't visited marketplace Dot S. P global Dot com, yet I encourage you to do so.
Turning to our investments and ESG, we continue to launch new products and Gore ESG franchise across the company. After recording ESG revenue of $65 million and 2020, we delivered revenue $43 million in the first half of this year was second quarter revenue the increased over 50% to $22 million versus the <unk>.
A year period with the launch of social and sustainability framework alignment opinion. So we introduced on our call last quarter ratings now has 4 products overall ratings completed 13, ESG evaluations 11, Green evaluations 16, Sam benchmark engagements and 10, social and sustainability framework alignment opinions.
On the quarter.
Market Intelligence launched electric quarterly reports tracking U S power purchase agreements.
These provide our clients with broad new insights and how energy revenues and renewable power purchase agreement pricing are trending.
Market intelligence also entered into an agreement to provide true cost carbon in environmental data to state Street's clients. These clients will access functionality, including mapping carbon footprint and other environmental data to portfolios T. C. F. D reporting features applying true cost carbons earnings at risk personally.
Mint and physical risk date intelligence, we launched a climate credit analytics product in partnership with all of the women tell banks comply with climate stress testing regulations and.
And we launched an S. F D. R data solution that allows firms operating in the European Union to meet newly formed sustainable finance disclosure regulation requirements by drawing on a wide range of ESG datasets from across SMP global.
And indices, we had $25.8 billion of ESG E T F. A U M. At the end of the second quarter. This is an increase of 290% since the end of the second quarter of last year.
Our indices business also launched ESG dividend aristocrats Index series partnered with evolved for the launch of index Etf's that offset the carbon footprint of stocks and worked with a German federal pension plan that reallocated 9 billion euros of assets to equity indices utilizing R E U climate transition benchmark.
Platts began publishing daily carbon credit price assessments, reflecting nature based carbon credits and household device carbon credit projects that are intended to bring additional transparency to carbon prices and carbon trading activity.
Platts launched the world's first daily carbon neutral LNG price assessment, which involves offsetting the carbon emissions. So the purchase and retirement of carbon credits.
<unk> also strength in its global sweet of hydrogen prices with new hydrogen price assessments for the U K and a new 2 degree warming scenario to the market, leading global integrated energy model.
Let me now turn to our outlook for global issuance in GDP.
After issuance growth of 15% and 2019, and 17% and 2020 or ratings research groups. Prior 2020th on forecast called for a decrease of 2%. The latest forecast was issued earlier this week and calls for a decrease of 1% without international public finance the level of issue.
Once in 2020 remains an aggregate hard to beat but the 2021 total should still come in at a historically high total likely surpassing 2019.
The 2 largest changes compared to the forecast last quarter includes structured finance, which went from a 6% gain to a 20% gain and non financials, which went from a 7.5% decrease to a 12% decrease.
Please note that this is a bond issuance forecast. This is not a revenue forecast for example, it doesn't address nontransaction revenue and doesn't include leveraged loan activity.
The peak of the pandemic appears to be behind us, particularly for the most advanced economies as vaccinations become widely available severe COVID-19 cases fall and economies reopen but we still see inevitable fits and starts with Covid risks still elevated this is happening earlier and faster than previously assumed driving both growth.
And inflation.
The macro outlook continues to improve we've raised our global growth forecast by 40 basis points to 5.9% of 2021.
This reflects stronger performance across the board in the first half of the year on.
Our 2022.2024 outlook shows a stronger U S, but lagging emerging markets.
Risks are shifting from the pandemic to the pace of the recovery in particular rising inflation. The U S. In some emerging markets points to a possible bumpy transition from the ultra low rates and easy financing conditions to the post COVID-19 steady state and with economies on the mend policy normalization and sustainability are coming into.
A sharper focus.
Finally, platts is forecasting that oil will remain above $65 a barrel through 2021. This is positive for the health of the oil industry.
I will now turn the call over to a belt steenburgen who's going to provide additional insights into our financial performance and outlook Ewald <unk>.
Thank you, let me start with our second quarter financial results Dark offered the highlights of strong revenue and adjusted earnings per share growth I will take a moment to cover a few other items. While there were some modest divestitures since the second quarter of 2020, the revenue associated with them was not large enough to result in a day.
France between reported and organic revenue growth adjust.
Adjusted total expenses increased 9% and that will provide some additional color on this in the next slides.
Our net interest expense declined 20% due to the refinancing of a substantial portion of our deaths last year to increase in the adjusted effective tax rate was due to an increase in Texas on foreign operations and the successful resolution of texts examinations in the prior year I.
We're full year tax rate guidance remains unchanged.
Our adjusted expense growth during the quarter was larger than normal at 9%. There are several reasons first second quarter 2020 expenses were impacted by pandemic related management action steak and last year second due to a strong financial results year to date performance related cost.
Including incentives commissions and royalties have increased.
Third xxxx increased expenses finally, I want to make it clear that our business as usual expenses remain under control.
During the quarter changes in foreign exchange rates had a positive impact on adjusted EPS of 3 cents the only meaningful impact washing ratings were adjusted operating profit was positively impacted by $15 million.
Last quarter, we introduced 3 new categories to provide insights into the type of expenses that are going to be encouraged related to the pending merger. The first guy degree is transaction costs. These are costs related to completing the merger. They include legal fees investment banking fees and filing fees does.
Second category is integration cost these are costs to operationalize. The integration. They include consulting infrastructure ever attention cost. The third category is cost to achieve these are costs needed to enable expense and revenue synergies. They include leashed terminations severance contract exit fees.
And investments related to product development marketing and distribution enhancements during the second quarter. The non-GAAP adjustments collectively totaled 2 a net pretax loss of $75 million. They included $9 million from murder transaction cost primarily legal.
Fish $39 million from merger integration cost, primarily consulting fees $2 million for cost to achieve a 3 million dollar lease impairment and $22 million and do overlaid on amortization and there was an after tax adjustment with respect to the revaluation of the first.
Tax liabilities related to a UK income tax rate change.
This quarter all 4 Deficience delivered increased revenue and adjusted operating profit on the trailing 4 quarter basis, adjusted operating profit margin increased significantly in platts and market intelligence, while ratings had a modest game and indices had a decrease of 100 basis points out for a fight.
Color on the individual business results in a moment.
Now turning to the balance sheet, our balance sheet has low laugh rich and ample liquidity, we have cash and cash equivalents of $5.2 billion death of $4.1 billion and Undrawn rough on her capacity on 1 and a half billion dollars and no commercial paper outstanding our adjusted gross.
Death to adjusted EBITDA improved since the end of last year to 1.8 times.
Free cash flow, excluding certain items was $1.6 billion in the first half of 2021, an increase of more than $100 million or 8% over the prior year period due to the pending merger with IHS market share repurchases have been suspended.
Now, let's turn to the deficient results ratings revenue increased 7% a strong investments great comes or more than offset by strength and bank loan ratings structured finance and nontransaction activity adjusted expenses increased 10%, primarily due to increased incentives salaries and xxxx.
These were sold it in a 5% increase and adjusted segment operating profit and a 100 basis points decrease and adjusted segment operating profit margin on the trading for quarter basis. Adjusted segment operating profit margin increased 30 basis points to 63.4%. Please keep in my.
Ain't It the 68.1% adjusted segment operating profit margin achieved in the second quarter is temporarily elevated based on the search of issuance in high yields leveraged loans and structured finance.
In China, we see continued momentum and interest in our ratings, we completed 13 ratings in the second quarter and 31 and the first half of 2021 compared to 22 and all last year.
Non transaction revenue increased 19%, primarily due to a more than tripling and new entity ratings revenue growth in fees associated with surveillance and rating evaluation surface revenue that more than doubled due to heightened levels of M&A activity investors search for yield.
And increased risk appetite continues to enable weaker credits to race that from.
Section revenue decreased with a substantial decline in investment grade bond issuance from last year's record quarter, mostly offset by an increase in bank loan ratings activity structured finance and high yield bond issuance.
Disliked depicts ravings revenue bite and markets the largest contributor to the increase in ratings revenue or C..86% increase in structured finance driven by Clo's, a b S. C. M. B S and R. M. B S. In addition, corporates declined 2% financial surfaces revenue increased 4%.
Governments increased 5% and the Crystle and other category increased 12%.
Turning to SP, Dow Jones indices, the segment delivered 16% revenue growth, primarily due to gangs and a link to our indices in the second quarter adjusted expenses increased 19% largely due to increased incentives salaries royalties and new product investments you.
Just it segment operating profit increased 15% and the adjusted segment operating profit margin decreased 80 basis points to 71.1% on the trading for quarter basis. The adjusted segment operating profit margin remained strong but decreased 100 basis points to 60.
9.2%.
Revenue growth was mixed this quarter assembling fees increased 28% primarily from games and ETS augmented by smaller gains in mutual funds and insurance and over the counter derivative activity exchange Ada derivative revenue decreased to 20 per cent on reduced trading volumes.
The second quarter of last year had elevated volatility related to the pandemic and the stock market recovery.
Data and custom subscriptions increased 11%.
The prominence of our U S. Indices is widely understood we have been partnering with exchanges around the world to expand our international presence. These include relationships with exchanges in Australia, Brazil, Canada, Japan, Korea and others.
Discharge is a new disclosure that depicts the steady progress we are making to grow revenue and dish markets. The revenue was split across asset linked fees and data and custom subscriptions.
4 hour indices deficient over the past year, ETF net inflows or $173 billion in market depreciation totaled $653 billion. This was hold it in quarter ending E. T. F. A U M of 2.4 trillion dollars, which is 51% higher compared to 1 year ago.
Our ETF revenue is based on efforts a U M, which increased 56% year over year sequentially force. The end of the first quarter ETF net inflows associated with our indices Donald $64 billion in market appreciation totaled $158 billion.
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As I, just noted exchange traded to relative revenue faced a strong comparison nevertheless activity at the C. B O E increased in the second quarter with S. M. P 500 index options activity, increasing 8% and fixed futures and options activity, increasing 43 per cent activity.
At the CME equity complex decreased 12%.
And here is another new disclosure, you'll have seen that the revenue from exchange rate. It's a relative activity can be very full adult from quarter to quarter. What I don't think is a parent is the strong underlying annual growth that has taken place. This chart depicts a 7 year keg or of 9% while the trend line is not <unk>.
Perfectly upward sloping the annual growth is much more consistent than the quarterly figures might suggest.
Market intelligence delivered revenue growth of 8% more than 1 third of the revenue growth was from recent profit investments, which increased by more than 40%. This was primarily from E. S. T 451 research <unk> SP global marketplace after market research and SME data.
Adjusted expenses increased 6%, primarily due to cost of sales and royalties adjust that segment operating profit increased 11% and he adjusted segment operating profit margin increased 100 basis points to 35.4% on the trailing 4 quarter basis adjusted.
Segment operating profit margin increased 100 basis points to 33.4%.
Looking across from market intelligence that was solid growth in each category desktop revenue grew 5% data management solution to revenue grew 13% and credit risk solutions revenue growth 10%.
And now turning to Platts reported revenue increased to 9% an uplift over recent quarters, our core subscriptions increased 9%, including about $2 million in benefits from the timing of contract renewals. It is notable that more than 1 quarter of the growth came from new products, including E.
S G and LNG oil prices and commodity prices in general are at a level, where most of our customers can profitably operate.
Global trading surfaces increased 4%, mainly due to strong LNG and petroleum fall humes, partially offset by lower natural gas forums adjusted expenses increased 10%, primarily due to incentives growth initiatives and commissions and you just it's segment operating profit increased 8 person.
Sent adjusted segment operating profit margin decreased 40 basis points to 57.9% the trailing 4 quarter adjusted segment operating profit margin increased 170 basis points to 55.9%.
While petrochemicals, what's the fastest growing category this quarter every category delivered meaningful growth.
And 1 final new disclosure Dear you can see the impressive revenue growth that global trading surfaces has delivered over the past 10 years. While this category has fallen <unk> from quarter to quarter. It has demonstrated a 10 year cake or of 18%.
We're not providing 2021 gap guidance, because given the inherent uncertainty around to merger management cannot reliably predict all the necessary components of gap measures.
And disliked depicts hour adjusted guidance, while we expect that's a merger will occur in the fourth quarter of this year, we're providing adjusted guidance on a standalone basis. The third column shows our new 2021 adjusted guidance with all the line items that changed highlighted we're making.
These changes because we now expect greater revenue growth, primarily due to improved outlooks in ratings and indices. Therefore, our revenue guidance is increased from a mid single digit increase to a high single digit increase corporate on the allocated is decreased by $5 million.
To a new range of $135 million to $145 million due to less project spending than originally anticipated Oprah.
Operating profit margin is increased by 40 basis points to a new range of 54.4% to 54.9% and this results in a 40 cent increase to adjusted diluted EPS guidance to a new range of $12.95 to $13.15.
And finally free cash flow generation has been increased by $100 million to a range of 3 and a half to $3.6 billion and.
In conclusion 2021 is turning out to be a very strong year for the company. All our businesses are delivering solid growth. We continue to expense our ear cheap product offerings and we are very excited about the upcoming merger with IHS market.
With that let me turn to call back over to chip for your questions.
Thank you just a couple of instructions for a phone participants to indicate that you wish to ask a question. Please pressed on 1 and record your name to cancel or withdraw your question simply price start too.
Please limit yourself to 2 questions in order to allow time for other colors during today's Q&A session on.
Operator will now take our first question.
Thank you Mister Merritt, our first question comes from Manado, Patnaik, but Barclays. Your line is all day.
Thank you good morning, I guess just my first question was around just you know your E. S. T effort. So now the 22 million you call that the score they're going 50. The same I think is that is that all the products that fall under this new sustainable 1 brand that you have and can you just talk about the weather.
What's your annual forecast for that might look like just get into a high growth rate.
Good morning, Manav, just as Doug. Thank you for joining the call. It the day and thanks for the question as you know we're very excited about what we're I've been doing with E. S. G. It's it's in an area, where we see a lot of growth a lot of interest from our customers and when we put together sustainable 1 for the for US. This is this is an ability provides disability to look.
[noise] across the entire portfolio and provide the services and products that are being issued in being demanded by our customers. So they can manage their own positions.
You know we are products cross ratings used your evaluations indices last year are are indices grew on 290% of E. S. G. A U M up to $25.8 billion Cross market intelligence, we launched the climate credit analytics, which are being used by banks by risk managers by asset managers to look at the.
Portfolio impact of climate in plants, we have a whole suite of price assessments voluntary carbon markets has just been launched as well as carbon neutral LNG. So we see high demand in the market, where having great engagement with our customers. We continue to develop new products and in particular around climate. This is an area where.
Our original.
Acquisition of true cost, we were able to Ah bring in place it really strong set of climate analytics, including a person named Richard Madison, who was the founder of true cost Who's now the president of sustainable 1 which is R. E. S. G business model, which is reporting to Martina Cheung. So we're very pleased with.
With the progress, but let me hand, it over to email them to talk a little bit more about the numbers.
With respect to the results. These are the complete results for our ear to your operation across the company shall we have built a horizontal P&L where it includes all of our activities for <unk> and all of our decisions. If you look at the growth. So far this year first quarter growth of 64% second core to 53% we.
Still expect that this year total revenues will end up approximately at $100 million and then 420.24 to 4 cash that that will exceed $300 million in total ESG revenue. So we're growing very rapidly and we were quite quite positive about the outlook.
Got it and then you know just a quick question on the you know readings my jeans, you know I need to talk about how it's elevated for the different categories, but you know just maybe on a multi outlook like you know how should we think about what the what are the different factors that will.
Drive the continued margin expansion on you know pretty healthy levels today.
With respect to do ratings margins I would like to point, you're edzard trailing for order for quarter margins, that's where 63.4% up 30 basis points, where she can a very large increase in the mortgage and ratings last year for 160 basis points and force.
The full year, the best direction I can give it to you wish think about margin for the full year in line with where we are for a trailing 4 quarter basis from a longer term perspective, we don't have new aspirational margin targets for our deficient we think the right moment to announce doses off the complete.
Mission of the merger with IHS market Ah, but a couple of factors that you have to take into consideration of course, there continue to be also day, a secular trench behind the ratings business as long as G. D. P is growing up I wish you positive economic momentum, they're really positive revenue growth of the ratings business, all sort of course or.
Our businesses have always operate operating leverage so operating leverage will be of benefit we do think Ah overtime, we need to invest in some analytical capacity because all at the level for you wish that we're seeing but that's a good for all of them to have so so my investments needs to be made in analytical capacity.
So that is the best I can give to you with respect to the outlook, but overall I would say very strong results by the ratings business and really topping a very strong year last year.
Got it thank you.
Thank you for your question on our next question is from Jeff Silber, What's BMO capital markets. Sir you May ask you a question.
Thank you so much wanted to shift gears over to China, obviously, there's been a lot of news over the past few weeks I I think there was a new data security law that you know it's going to affect it a couple of months and then we'd just a more broader risking a number of different industries can you talk about you know, what's going out there and and and the implications it might have for your business.
Oh. Thank you Jeff Yeah. We have is you know we built a domestic rating agency in China 2 years ago. When we launched that we had a decision to to go with a wholly owned subsidiary. In addition, we've been expanding our business with market intelligence on on the ground as well building Ah on shore China busy.
We understand that the new data security law, which is going to be going into place in September is related to managing domestic information since we've been building our businesses on shores domestic onshore businesses, we think that will be able to meet the requirements of the of the domestic law. So the data security law for onshore businesses.
Should we should be able to meet those requirements because we're building new businesses from scratch and their onshore businesses related to the general Ah business environment clearly there's.
A lot of noise at the at the macro level between the United States and China Ah, we paid attention to that very closely but at the financial services sector. We still see very open regulators, they're open to bringing in foreign players into the market. We continue to see a foreign banks in for an asset managers get license.
As a 51% on 100 per cent owned on licenses and we continue to get excellent reception on the market for our domestic Chinese a ratings business.
Okay. That's that's helpful and just keeping with the regulatory thing that made me shifting back to the U S. You know we've seen some announcements out of Washington insurance of some greater scrutiny on mergers Uhm are you seeing any additional pressure in terms of the info merger. It can't get also just remind us what the milestones may need to be looking out for before the deal closest.
Yeah. Thank you on that as you know, we're obviously engaged right now very very almost continuously with the regulators of for our own merger. It's a very constructive dialogue engagement they were having with them and when it comes to what we're seeing ourselves that our our merger is really about combining 2 very.
Entry businesses, we're engaged with the antitrust regulators and have proposed to a divestiture of of Infos Opus and cold businesses are based on that feedback, but we don't really see any major roadblocks are coming up on our way, but we do continue to track the environment very closely and we do.
Continue to expect that the transaction will close on the fourth quarter of this year.
Okay, great. Thank you so much Inc.
Thank you for your question. Our next question comes from Craig humor, with Hebrew Research partners.
You May ask you a question.
Yes, hi.
You went on your way to talk about.
The lack of pull forward uhm and if if given this despite the strong that issue to recently so if you talk if you would talk about the future here in terms of debt issuance and obviously the stock the total amount of debt outstanding cause grown significantly here, how does that make you feel go on for for your ratings business going forward given how <unk>.
Strong high yield has been here recently and <unk> few cordial record investment great here over the last year and stuff, but I mean, how often optimistic are you calling for for your readings business.
This is this is something that obviously watch very closely and this last quarter I had some of the largest swings I've ever seen since I've been in this company of different asset classes of issuance as an example, the the in the U S. Corporates were down 63% a year on year of issuance Europe was down.
5% in corporate investment grade globally was down 26%, although high yield was up 27% you you saw some of the numbers C. L. O's were up almost 500% globally, 580% in the U S. So we saw a lot of swings, but we take a step back and we look at a few really important fat.
There's 4 of going forward on on issuance both for what's gonna be the rest of the year, which we mentioned we expect will be down about 1% for total issuance and I'll come back to the second but we look at economic growth, which is starting to become very robust. We do think that will level out once we get through the.
And once we get through the pandemic, but at a pretty robust level for the U S. Europe and Asia. That's that's beneficial for us once that goes on to balance sheets as as bonds or is rated loans. It typically continues to be a rated loans or a rated born so we see that the pipeline of that that's been.
Increasing in addition, we we watch things like Ah mergers and acquisitions, which are very robust right now which are helping the current environment, especially for high yield and loans, but when you look at the when you look at the ability for markets around the world to shift from being bank markets to capital markets. You look at overall economic growth you look.
At a low interest rates, which we expect are gonna continue for for some time in the major developed markets. These are all things that are beneficial for our longterm outlook for ratings. Since you did ask the question very briefly on.
2021 forecast, we expect that the that the overall market is gonna be down about 1% last quarter. We said that was gonna be down about 2%. So that's a short term view that doesn't include loans, which we still think we're also going to be robust for the rest of the year.
My follow up question, if I could ask them to market intelligence was very strong her obviously up 8% organically haven't seen a number like that in quite a while I'm on obviously if it tells me that the underlying health of your and markets. Their customer service is quite good I can maybe comment on that and also what's driving that's strong growth and do you think it's.
We'll continue thanks.
Correct, we saw growth across the market intelligence product lines desktop issue was seen 5% growth you recall last quarter to growth in desktop was a bit lower and we told you that that would be just be temporary and we are happy to see it coming back to mid single digits.
Both also the data management solutions and credit resolutions grew a bit faster than what you would expect from a longer term perspective overall, what we are seeing is healthy commercial activities from sales levels. During the second quarter, particularly sales to use corporate is being very strong and we're also.
I've seen very strong renewables in our book of business. So overall book of business growing very well active users going up by by 10% and I think it's overall reflection of the positive economic environment that we're in at the moment.
Great. Thank you.
Thank you for your question on our next question is from Andrew Nicholas What William Blair.
You May ask you a question.
Hi, Good morning. This is Trevor Romeo and for Andrew. Thank you for taking my questions first just kind of wanted to touch on Platts was nice to see the revenue growth acceleration. There I know you mentioned 2 million came from contract timing, but still seemed like a nice you know kind of sequential increase in the past few quarters. So we're just wondering if you could spend you know on.
On it or to dive in a bit deeper into the growth drive growth drivers there kinda how sustainable that is going forward.
Good morning, Trevor definitely at 1 of the stronger quarters in terms of revenue growth of plants over the last few years and if you would take that 2 million metric out from a timing perspective, you still see very significant growth.
Driven by strong commercial momentum in the core and insights businesses, but also the global trading surfaces volumes are growing what we're seeing in general is our customers are getting healthier with the current commodity prices, but clearly the commodity price environment is helping our customers and that is ultimately also helping.
The growth of the plants business.
Got it thanks and then.
On the indices segment noticed a few recent announcements related to I guess kind of new S. N P. Crypto currency indices. So it was just kind of wondering if you could broadly talk about your your longterm vision for those types of indices and how you're thinking about the size of that opportunity.
Thanks to Trevor well first of all that when we were looking at the crypto currency market in digital financed more broadly than just indices, we don't necessarily have a clear strategy towards particulate there yet, but it's something that we see growing ah for opportunities for research and analytics and other things around that but we started it with the index.
Business.
The market for crypto currency assets. It's growing you can see that there's a lot of interest in it in this also goes beyond just crypto into obviously as well blockchain, we announced the first indices are in partnership using the data pricing from a company called Luca that we have an investment in it's a New York based company that provides.
Sides of data and analytics as well as crypto acid software, we have launched a since then a few different indices 8 to date, there's an SMP bitcoin S. M. P. A Syrian we have them crypto currency Mega cap index in a couple of it provide abroad index, which includes a values from over 240.
Coins, we have a team that is looking at this quite carefully in addition to using some of our expertise from Ken show to analyze the trends in the market.
We think that this is going to become an asset class that overtime would potentially become more acceptable to Ah to investors. We see that many of the major financial institutions have started trading desks or businesses around this. So this is an area. We we will continue to invest to grow in it it's quite small right now and I don't have enough ability to give you any.
Any market sizing a pricing on it yet because this is really a brand new market.
Alright, well. Thank you both for the detail thanks Trevor.
Thank you for your question. Our next question is from Jeff Waler with bird.
Yeah. Thank you I guess I was surprised by how strong ratings Nontransactional revenue was in the corner and how much it accelerated in a slightly down ratings environment. I was hoping you could talk through how mix is impacting crickets ratings nontransactional revenue and how.
Stand up on the growth is.
Yeah, we have seen growth in non from section by all the underlying components. So that's the reason why you saw such a strong growth in the non transaction. This quarter. So let me expense debates on on that so 1 component is new entity credit ratings, it's about 1 third of the overall growth in.
From section that came from new entity credit ratings. Another 1 third of the growth game from surveillance and that's being held by the larger number of bonds outstanding based on the search of issuance last year and then the rest is a buildup of ratings evaluation surfaces, driven by the emanated positive M&A environment.
Doug already explained program freeze program fees and also the Crystal results were very strong dish quarter. So you could say all the underlying components were really pointing to a positive direction. What I can say is in terms of outlook for the full year for non transaction, where are now expecting high single digit grow.
In this day and this guy degree.
Alright. Thank you for that and then just given the marketplace slide and what I would think would be a good opportunity post merger clothes. If you could help me understand to what extent is this and I see like the most active user categories, but to what extent is uhm marketplace, expanding your reach and too.
New customer relationships to what extent does it increasing your relationships with existing and how important are the partnerships I think snowflake no data bricks to the go to market versus a I guess internal go to market effort.
Thanks, Jeff Yeah. This is really an important part of our if you're on a call at our distribution and Ah client engagement strategy across the company, we realized a few years ago that our customers that they use cases, we're gonna be shifting and that the the different profiles of of the of the users of our our businesses we're gonna.
Shifting more people are gonna be using models and modeling they were going to be wanting to get data that had been curated it had been cleaned it was easy to use and then we realized over the last couple of years as we started launching that that there are many users that also would like to have tools that they could quickly analyzed data or even ah directly linked it into their own.
So this is where data bricks and snowflake come in we've added as you see we didn't have 169 different tiles with E. S G and credit analytics and some other day to market data being the most most highly use so far when it comes to our customers the profile of.
Of the personas that are using it are slightly different but they're the same customers. So it's a lot of corporate customers hedge funds asset managers risk managers inside financial institutions. So many times, it's similar types of our customers that we already have but it's different profiles personas inside of those inside of those customers that are.
Using this new data and these new analytical tools, we see a lot of people using python when they when they bring the day to over into their own systems to do a day to science analytics, but it's something that we're quite excited about and we're also learning we get a lot of ideas from or directly from our clients of new ways to enhance it or new datasets that they'd like to see it <unk>.
Glued into that but we're really pleased with the results of this I would I would recommend that everybody go take a look at it. If this was a call that chip Merritt could I have a chance to share screen, he would and he'd show us all of the different opportunities you have to use data for what you're actually doing your jobs every day and thanks for the question. Thank you Bob.
Thank you for your question. Our next question is fine.
<unk> R. B C capital markets you May ask you a question.
Thanks for taking my question and congrats on a solid quarter.
My question was on product innovation, you you highlighted 1 sort of the revenue growth and market intelligence as well as a quarter on revenue growth and platts coming from new products and we've seen acceleration they'd have nuclear explanation. Both this businesses. My question was how do you think about product innovation post the info merger with.
<unk> incremental data and keep it the ladies how do you think about your ability to innovate going forward. Thanks.
Especially if we are really excited about the opportunity to even further accelerate our product innovation together with IHS markets.
Because you know our strategy, maybe take a few step backwards I always strategies, we are growing in our core businesses because of positive sheckler trends, but then we would like to grow in addition to that based on all the new product innovation and we're investing in death now for the last 2 or 3 years, we have a very specific.
Investment program and we're very happy that this year you are seeing some of the clear benefits coming out of it and growth in our in our segments and and some of the growth items that you've already pointed out.
With IHS, Margaret actually we believe or even better positions for future growth because we are strengthening 3 of our 4 divisions and dose of patients will be very complimentary in terms of nature of activities that are coming together and then on top of it we will also grow even more in the growth adjacencies.
The market's around ESG energy transition private company data D. A third party assessments and so on and so even to growth Adjacencies, we will be stronger positions to grow in the future based on the combined company. So actually it's 1 of the key reasons why we are.
<unk> doing this merger because the combined company an hour if you can grow faster than the 2 companies will be able to achieve stand alone.
That's very helpful color and maybe just a quick question on cost synergies Uhm, particularly post the info much or you have obviously given that target but in addition, both S. M. B N in full independent Cuba, pushing cost day called initiatives. So opposed to much your how should we think about it would you plan to combine all of that and.
Uhm.
And also any upbeat that you can provide on S. N p's independent <unk>. Thanks.
Overall, Ashish all of those productivity programs are moving forward in a in a way, we're making a lot of good a lot of good progress.
On a couple of the questions you asked let me break dose down so first D. SMP global productivity program that we have 2 day to 120 million productivity program, where plenty to give you an update either during the third or the fourth quarter earnings Covid, we'd like to do that updates as close as possible to the completion of the.
[noise] merger, so that you know how far we have been able to come on a standalone basis, but what I can say is where we're at 49 million at the end of last year, and we're making very significant progress. This year with respect to that program I can't talk too much about I just markets, but they have a state it's productive.
<unk> and efficiency program to expense margins by 100 basis points every every year.
Of course that will be all combined into synergies and expense synergies that we're going to achieve after the completion of the transaction.
And it'll give you any update on those numbers, what we have said it will come back to you if appropriate after the completion of the transaction with updates if we have any updates to those numbers, but clearly we are working in the integration planning on further.
Substantiating and supporting those synergy numbers from about themselves bottom shops perspective, and we are getting more and more comfortable over time with respect to those those numbers and the.
The expectation is that then the combined company.
In the future, we'll be able to expand margins by 200 basis points for the first few years. So all of those commitments are are still in place.
That's very helpful color tanks once again, congrats on such a solid <unk>. Thank you.
Thank you.
Thank you for your question on our next question is from Georgetown with Goldman Sachs. You May ask you a question.
Hi, Thanks, Good morning, you're forecasting 2021 on global debt issuance to declined 1% excluding loans can you discuss your outlook for the individual day categories, including loans in how you expect the evolving macro an interest rate environment to impact issuance.
Yeah. Thanks.
Thanks, George Ah. So first of all let me go through the components in of the of that 1% down we look at the corporates and we corporate so far are down this year about 12% overall as I mentioned earlier of so far this year in corporate stare down 40% in the in the second quarter, but we.
Spec that overall, they're gonna be down about 12%. So that's that category a financial services have actually been a little bit more robust than we had originally expected. We thought they were gonna be up about 4%, but we think it should go up as high as 10%, but our our mid point is about 7.5 per cent just as an anecdote.
On that the last quarter Bank of America issued $28 billion J P. Morgan issued $23 billion. It looks like the banks are starting to use their balance sheets again and in Europe. All of the largest of the 10 largest issuers in Europe that we're all on the 4 to 6 billion dollar range almost all of those exception of 1 where a financial.
<unk>. So we think financial issues will will be up for the year.
A structured finance, we think will be up about 20% for the year, we see that the structured finance market is still going quite strong as we mentioned in the second quarter was up over 147% on overall, we don't think that that pace I will continue on structured finance, but we see it up 20% we had originally.
Set on our prior forecast it'll be up about 6%.
In 2021 as opposed to now raising it to 20%.
We'd look at public finance, we still think that's gonna be down about 5% public finance issues have not been as active if there is an infrastructure program approved in Washington, and we do see a revitalization of infrastructure investment in the U S. Public finance would probably go along with that Ah. So overall, we see.
Bond issuance down about 1% when you're out of all of them up together, we think that loans are going to continue to be strong Ah I don't have a specific number for the ear, what they're gonna be up but they will they'll continue to be up you saw the the numbers of how strong they'd been compared to the prior years, but the pipeline as strong to emanate pipeline as strong when it comes to interest rates.
Interest rates are still quite low spreads are low on interest rates are low spreads or not at the lowest they've ever been but there are close to Ah low areas, especially after the spike that we saw last year and the end of the first quarter and into the second quarter. When the pandemic first started so we do think that there's gonna be a lot of strength in loans.
And then subsequently from that's yellows as well for the rest of the year just 1 other what other tidbit, we see that in in the a b S area, which is goes between the loans and a b S. We see a lot of activity related to autos related to corporate banks corporate restructuring to their balance sheets et cetera. So we.
Still see a lot of activity interest rate driven but recall that last year. There was a lot of liquidity issuance that was driven by investment grade corporates that is basically gone away and you saw that from the big drop and that's been substituted now bye bye loans by structured finance by a b S et cetera, and we think that that's gonna continue for the.
Rest of the year and then as I mentioned in an earlier question, we see that all of this positions as well for the long run.
Very helpful. You're increasing your guidance for revenue growth too high single digits from mid single digits. Previously can you elaborate on your latest segment growth expectations for the year, including how much of the upwardly revised guidance reflects 2.2 outperformance versus an improved second half outlook.
George Let me give you the components by each of our segments Ah I only give you guidance for a full year basis, and I think you probably can derived from that the outlook for the second half of the year before ratings were now expecting revenue growth at a high single digit level. So that's up from.
Myths last quarter to know high single digits.
Intelligence is still at the level from mid to high single digits.
<unk> has gone up from MIT to mid to high single day, just revenue growth and your index patience now we are expecting low double digits revenue growth that's up from high single digits too low double digits. So 3 of the 4 segments were increasing deriving your outlook for the full year and then also for the company.
As a whole and the revenue outlook has been increased too high single digit growth.
Very helpful. Thank you.
Okay. Thank you for your question on our next question is from Aoun law with Oppenheimer.
Your line is open.
Good morning. Thank you for taking my questions quick question on Kenny show Scribe I think it was recently launched for commercial use could you. Please talk about attraction. There and then broadly speaking could you. Please talk about the progress of deploying can show it into the overall basis and what have you learned so far thank you.
Well when we continue to be very excited about all they can show initiatives that are continuing within within the company can so can show in the meantime, it has developed a complete AI toolkits for unstructured data with many different elements that are in the toolkit about entity.
Linking data extraction speech to text search Kodak's Ah named entity recognition. Many other initiatives that have been developed and those tools are being used across the company. Let me give you 2 specific examples including the 1 that you refer.
Going to with respect to scribe prescribe is to speech to text algorithm engine and we are using that for our own business. Just for example for our earnings growth transcript business and the more you can teach don't algorithms based on the.
Actual activity day, better day become stronger issue engine. So all of our activities with respect to our Ernest full transcript business is now being done through Cantrips gripe and the quality is really very high at at the moment and further improving old for overtime, that's indeed being so.
Now also to external customers. So we have a few extra on our customers now that are interested in this engine because it's 1 of the best products that he said that it's out there and so we are actually very excited about the fact that can choke I know if it's 2 external customers as well with some of it's it's products.
Let me give you a second example, this is about market on clothes into Platts business at 26 markets. Now this is being implemented and we have reduced 75% of the time between the market clothes and publishing our prices, which is of course, it very important for our customers because the closure.
At that time gap the better it is for them 14 markets still to go. So in other words at can show initiatives are continuing and we continue to be very excited about the transformative nature of that can show spring 2 SP global.
Got it that's very helpful. And then a follow up question something related to D. Info acquisition, but could you. Please we might us the benefit of owning the data versus like renting the data from S. M people aren't available for example can you like create additional products or surfaces bye.
Only that data versus maybe you may not be able to do it by renting that day too. Thank you.
Oh and thank you for the question when we look at the IHS market a merger when we originally conceived of it and as we continue to go through our analysis to work on our integration planning, we see that there's lots of opportunities across the company that goes well beyond just the data there are many different ways that we can.
Have a complimentary data usage as an example, the fixed income indices is 1 of the ones that we talk a lot about because they have fixed income data they've got the fixed income business that already exists. They have the reference data. So we can quickly put the their index business together with ours increase the or asset class coverage is.
As well as innovative new areas like multitask asset class indices. So beyond just the data usage and the data linkage across the company. There's many more opportunities as an example, deploying some of IHS markets Ah software software tools work flow tools things that we don't have as much as SMP global.
And that expertise into 2 markets into new markets like ESG like climate.
We're we're very excited about things like that so the combination goes well beyond data data is fundamental to it bringing those data data together like their day to lake in our marketplace Ah reference data that can be used across our company. That's that's sort of a nice to have it's necessary, but beyond that to be sufficient and to really make this excite.
Adding it goes also into analytics into research into software tools et cetera. So we continue to be excited about this and data is fundamental to it but it goes well beyond that.
All right. That's very helpful. Thank you very much and so on.
Thank you for your question on our next question comes from Kevin to Mcveigh with Credit Suisse.
You May ask you a question Sir.
Thank you so much.
Thank you folks did a really nice job talking about kind of.
<unk> cycle overall that you talked about kind of clients searching for yield as you go a little bit further down the credit stack where are we in that process and then you know how do we reconcile that because obviously feels like the bond markets a lot healthier relative to the last cycle, maybe not as much access so Doug does that.
Help off set maybe some of the tougher comps it as we push this duration out a little bit just any any puts and takes around that.
Yeah, when when we look at the debt cycle and we tried to see where we are clearly the interest rates are quite low, but there's a if you want a thing that it's almost like a supply and demand issue. There is an incredible amount of supply of liquidity a lot of that liquidity is positioning for a higher rate or an inflationary market, which means that they've moved into floating right in.
Instruments, and so you see a large amount of funds have moved into floating rate instruments, which means that there's a lot of liquidity available for floating rate loans and C. L. O's [noise]. So you can see that there's been a shift of liquidity that direction, but we we look at this more in the longer run there is a dead cycle, which is is we're going through right.
Now, but that is good that's going on to People's balance sheets. There is a large amount of debt issuance has been investment grade and the investment grade has been holding up the debt levels and interest rate coverage levels are still strong we've been holding towards standards for what would be an investment grade issuer and then when you look at the many many high yield issue is.
Been coming out clearly the market understands the risks, they're taking when they invest in in a deep high yield.
Issuance, but we think that when you look at the some of the slides that we showed today of the of the of the balance sheets of the of the maturity schedules, which are coming up that this bodes well in the long run for for the overall markets that doesn't mean that every single quarter is going to be always be up we saw this quarter a lot of movements of.
Some very strong growth in some areas a lot of decreases and others and we expect that we're gonna see that especially as the market's we accommodate.
Super Helpful. And then just real quick.
On the buyback, even though I know you're restricted right now with the deal but can you just remind us when you could potentially be back in the market pending guilt closure and how we should think about that relative to scout capital allocation overall.
Absolutely Kevin mm.
Buybacks, we would probably not be able or most likely not be able to do buybacks before the completion of the merger then I'll were thinking at the moment is that after completion of the merger, we do a catch up and it got you up is in relation to adults period that we're not able to return cash.
<unk> to our shareholders, that's a level of our capital targets at the at least 75% return of capital targets that we were not able to achieve since the mid of last year until the fourth quarter of this year also you have to take into account they are dead IHS from market itself.
To any share buyback so you'll have to take that in consideration as well as potential proceeds of some of the Ah divestitures, we'd like to do that catch up because we would like to go as quickly as possible into the rhythm of our new capital return targets of at least 85% of our free cash flow and to come by.
And company will be accompanied that's very soon after the completion will get to a level of approximately 5 billion or north of $5 billion free cash flow very significant amount and so we would like to go back into a normal rhythm as quickly as possible I come to gives you a specific numbers I know there's a big.
Question on the street about numbers in terms of the buybacks into catch up I can't give you specific numbers, but philosophically at this is the way we would like to approach. This and overall I think we will be in a very good position to get back into our normal rhythm with respect to our capital return targets.
Very helpful. Thank you.
Thank you for your question, we will now take our final question from Toni Kaplan with Morgan Stanley.
You May ask you a question.
Thanks, very much I was hoping you could give some additional color regarding how you're thinking about any potential benefits from that proposed infrastructure balance.
Yeah, Thanks, Tony well first of all I'm I'm encouraged to see that there is a bipartisan.
Process going on in Washington around infrastructure, it's something that we need in this country both of bipartisanship as well as investment in infrastructure, we think that there'll be a few potential benefits from that the first is just a general economic growth. We have done a lot of research and analysis on on infrastructure over the years and infrastructure generally Lee.
Needs to growth beyond just invested in infrastructure itself, we we estimate that it somewhere about 1.7 to 1.9 times additional economic growth that comes from infrastructure. So when you build an airport around an airport you get rental cars you get gas stations you get activity inside the airport from Ah people buying food and gifts et cetera.
So we see that there is a potential economic benefit which should help growth. It also helps jobs all of that helps a business climate generally, which obviously is beneficial to us more specifically if there is an infrastructure bill we do think that despite a much of it being discussed is being funded by.
The public sector that there'll be opportunities for public private partnerships, which would bring with them a potentially debt financing the municipal bond market could take on more activity, if there's gonna be local investment in infrastructure.
And then the companies themselves construction companies the large projects, they're gonna need financing as they go through the projects themselves. So we think that this will be in general beneficial to the overall economy I think it's a good signal from Washington, and then overall it could have some benefits to us in particular for the ratings business.
That's how far and just looking at first half index margins, where about 71% and that's typically your highest increments on March in business.
Arching degradation, usually coming from reinvestment Jones.
Just thinking about that and how should we think about the medium term targets from margins.
An index shakily startup felt off the low seventies number or are there additional investments that.
On a make that could bring that that level down. Thank you.
Toni I can give you some guidance for the full year 2021 margins for the index business that we expect to be at the high sixties level. If you look at the trading 4 corridor at level 4 index. It was 69.2 so.
More or less the same margins for the full year as we have today on the trailing 4 quarter basis. It's exactly for the reason that you are mentioning in fact for a business that is having such a high margins.
Best thing you can do from a L. G U a creation perspective is to grow.
Grow that business as fast as you can so investing in new products initiatives, who belief is a very positive thing 40 index business and that is exactly what we are doing at this point in time, we're investing in ESG indices, we're investing and can show new economy indices and multi asset class in this.
Fish and new capabilities with respect to rapid index development.
So overall these levels of investments are still relatively modest Ah from a bigger picture perspective, but good investments that should position our index vision is for future growth.
Perfect. Thank you much Toni at 10 o'clock. Thank.
Thank you. Thanks, so much and thank you everyone for joining the call today and for your support as you can see we're very pleased with the performance of this quarter and we're also very excited about all we've been doing it the company and all we can do going back we highlighted today, the Dow Jones Index, which was the Dow Jones Industrial index, which is 102.
5 years old and at the same time, we're bringing brand new innovative research and analytics the market's through what we talked about with Ken show with ESG evaluations with with climate analytics with the credit climate analytics with new benchmarks from Platts.
With our China expansion and so we have so much new innovation going on we're also excited about that to see how that starts to play out and also highlighted by what we've been doing with the marketplace, but on top of that we're excited about the IHS market merger. The progress is good we're very pleased with all of the things we're learning about the companies across both teams.
Especially the quality of the people, but I want to end by thinking our employees again, who has been working under what I would call unusual circumstances, but it's exciting to start opening up our offices again to see people at the offices to get a little bit of travel going again. So again. Thank you to our employees. Thank you everyone on the call and I hope everyone gets at least a little bit of <unk>.
Time to enjoy part of the summer thanks again.
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