Fitch Ratings on Friday maintained Moody's Corporation's (NYSE:MCO) Long-Term Issuer Default Rating at 'BBB+' and revised the outlook to Positive from Stable. The agency also reaffirmed Moody's Short-Term IssR and commercial paper ratings at 'F1'.
In explaining the outlook change, Fitch highlighted Moody's position as a leading global credit rating agency and pointed to increased overall scale, a pattern of sustained and expanding free cash flow, and continued adherence to steady financial policies. The rating agency noted specific balance-sheet metrics underpinning its view: Moody's ended 2025 with EBITDA leverage of 1.7x and holds more than $2 billion in cash, an undrawn revolver and a $1 billion commercial paper facility.
Fitch said its Positive Outlook reflects these strengths and that an upgrade could follow if Moody's keeps growing while sustaining its margin and free cash flow profile. The firm also expects the company to continue returning meaningful capital to shareholders via dividends and share repurchases while preserving relatively stable credit metrics.
The rating agency characterized Moody's business model as highly profitable and cash-generative. Fitch emphasized that both the ratings and analytics businesses benefit from low capital intensity and significant operating leverage. Moody's diversification beyond pure ratings - notably Moody's Analytics - now provides large recurring revenue streams and accounts for more than 40% of total revenue, a factor Fitch said supports the company's credit profile.
Fitch's forward-looking assumptions include results for 2026 that align with management expectations, revenue growth slowing to lower-single-digit rates in 2027 and beyond, and EBITDA margins remaining above 50% in future years. The agency also projects that Moody's EBITDA leverage will stay below 2.0x.
Context and implications
Fitch's assessment centers on operational cash generation, margin durability and diversity of revenue streams. Those elements, combined with a conservative liquidity position, form the basis for the Positive Outlook and the potential for a higher rating if Moody's maintains its current profile.
While Fitch flagged the conditions under which it would consider an upgrade, the firm's assumptions for 2026 and beyond make clear that meeting management guidance and preserving high margins and low leverage are central to sustaining an improved rating trajectory.