Moody's (MCO) Acquires ABS Suite Business From Deloitte

Moody's Corporation (NYSE:MCO) recently announced that it acquired ABS Suite from Deloitte & Touche LLP, as part of its efforts to strengthen the Moody’s Analytics division. The transaction, which was funded using cash, will not have any material impact on the company’s 2019 financial results.

ABS Suite is a software platform that is used by issuers and trustees for management and supervision of asset-backed and mortgage-backed securities programs.

The Moody's Analytics division, which represents more than 35% of Moody's revenues, offers various solutions related to financial and risk-management activities of institutions. Under its Enterprise Risk Solutions, it provides risk-management software solutions and related services. Its Research, Data & Analytics provides investor-oriented research and data, including in-depth research on major debt issuers and industry studies.

The president of Moody’s Analytics, Mark Almeida, said, “The acquisition of ABS Suite deepens Moody’s Analytics’ presence with issuers of securitized transactions. Adding the expertise and experience of the ABS Suite team to our already formidable capabilities enables us to provide more and better solutions that improve funding decisions, increase operational efficiency and promote transparency and efficiency in the securitization financial markets.”

Employees of ABS Suite will join the Structured Solutions business of Moody’s Analytics.

The global customer base of the ABS Suite platform has five of the top eight credit card issuers, five of the top ten auto finance issuers, and many large issuers of telecom and mortgage receivable securitizations.

Notably, Moody’s is pursuing growth in areas outside the core credit ratings service. The company has increased its exposure to the banking and insurance industry, branching into the emerging and fast-growing professional services, and enterprise risk solutions sectors. In fact, the rising share of the analytics business, which is not correlated with the volatility of interest rates, has added stability to Moody’s top-line growth.

Also, the company grew meaningfully over the years through several strategic acquisitions, which provided it with increased scale and cross-selling opportunities across products and vertical markets.

Apart from Moody’s, many financial firms are expanding through acquisitions to improve revenue mix. Some of these are LPL Financial Holdings Inc. (NASDAQ:LPLA) , Stifel Financial Corporation (NYSE:SF) and Valley National Bancorp (NASDAQ:VLY) .

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