Good day, and welcome ladies and gentlemen to the Moody’s Corporation Third Quarter 2014 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers following the presentation. I will now turn the conference over to Salli Schwartz, Global Head of Investor Relations. Please go ahead, ma’am.

Thank you. Good morning, everyone and thanks for joining us on this teleconference to discuss Moody’s third quarter results for 2014 as well as our outlook for full year 2014. I am Salli Schwartz, Global Head of Investor Relations. Moody’s released its results for the third quarter of 2014 this morning. The earnings press release and a presentation to accompany this teleconference are both available on our website at ir.moodys.com. Ray McDaniel, President and Chief Executive Officer of Moody’s Corporation will lead this morning’s conference call. Also making prepared remarks on the call this morning is Linda Huber, Chief Financial Officer of Moody’s Corporation. Before we begin, I call your attention to the Safe Harbor language, which can be found towards the end of our earnings press release. Today’s remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the Act, I also direct your attention to the Management’s Discussion and Analysis section and the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2013 and in other SEC filings made by the company, which are available on our website and on the Securities and Exchange Commission’s website. These, together with the Safe Harbor statements, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements. I would also like to point out that members of the media may be on the call this morning in a listen-only mode. I will now turn the call over to Ray McDaniel.

Thanks, Salli. Good morning and thank you everyone for joining today’s call. I’ll begin by summarizing Moody’s third quarter 2014 results. Linda will follow with additional financial detail and operating highlights. I will then conclude with a few general updates and comments on our outlook for 2014. After our prepared remarks, we’ll be happy to respond to your questions. Moody’s achieved strong growth in the third quarter with total revenue of $816 million, an increase of 16% over the third quarter of 2013. Record revenue growth in Moody’s Analytics and double-digit revenue growth in nearly every line of business contributed to our overall performance. Operating expenses for the third quarter were $466 million, a 13% increase from the third quarter of 2013. Operating income for the third quarter was $350 million, a 20% increase from the prior year period. Adjusted operating income, defined as operating income less depreciation and amortization, was $373 million, up 18% from the same period last year. Operating margin for the third quarter of 42.9% was up from 41.3% in the third quarter of 2013. Adjusted operating margin of 45.7% for the quarter was up from 44.6% the same period last year. Diluted earnings per share of $1 for the quarter increased 20% from $0.83 in the third quarter of 2013. Non-GAAP EPS of $0.97, which excluded a $0.03 benefit from the resolution of a legacy tax matter, increased 17% from the third quarter of 2013. Turning to year-to-date performance, revenue for the first nine months of 2014 was $2.5 billion, a 12% increase from the first nine months of 2013. Revenue of Moody’s Investor Service was $1.7 billion, an increase of 10% from a year ago. Moody’s Analytics revenue for the first nine months of 2014 of $766 million was 17% higher than the prior year period. Operating expenses for the first nine months of 2014 were $1.4 billion, up 7% from the first nine months of 2013, which included a first quarter litigation settlement charge. Operating income of $1.1 billion increased 19% from $923 million in 2013. Adjusted operating income was $1.2 billion, a 17% increase from the prior year period. Operating margin for the first nine months of 2014 of 44.5% was up from 42.1% from the same period last year. Adjusted operating margin of 47.3% was up from 45.3%. Diluted earnings per share of $3.48 for the first nine months of 2014 increased 31% from $2.66 for the same period in 2013. Non-GAAP EPS of $3.09 for the first nine months of 2014 grew 10% from $2.80 for the same period in 2013. Year-to-date 2014 non-GAAP EPS excludes a $0.36 gain resulting from Moody’s acquisition of a controlling interest in ICRA Limited in the second quarter and the $0.03 legacy tax benefit in the third quarter. Year-to-date 2013 non-GAAP EPS excludes the first quarter litigation settlement charge of $0.14. I will now turn the call over to Linda to provide further commentary on our financial results and other updates.

Thanks Ray. I will begin with revenue at the company level. As Ray mentioned, Moody’s total revenue for the quarter increased 16% to $816 million. The impact of foreign currency translation on revenue was negligible for the quarter. Third quarter U.S. revenue increased 15% to $449 million, while revenue outside the U.S. grew 17% to $367 million and represented 45% of Moody’s total revenue for the quarter. Global recurring revenue grew 10% to $415 million and represented 51% of total revenue, down from 53% in the prior year period. Looking now at each of our businesses starting with Moody’s Investor Service, total MIS revenue for the quarter was $543 million, up 14% from the prior year period. U.S. MIS revenue of $329 million increased 13% from the third quarter of 2013. MIS revenue generated outside the U.S. of $214 million increased 14% and represented 39% of total ratings revenue. The impact of foreign currency translation on MIS revenue was negligible. Moving to the lines of business for MIS, first global corporate finance revenue in the third quarter increased 12% from the year ago period to $261 million. Despite a year-over-year decline in global non-finance corporate bond issuance volume and flat rated bank loan issuance volume, Moody’s benefited from a greater number of smaller deals. This favorable mix of bond and bank loan issuance as well as additional monitoring revenue associated with new ratings customers were the primary drivers of year-on-year revenue growth in the corporate finance line of business. U.S. and non-U.S. corporate finance revenue were up 8% and 19% respectively. Second, global structured finance revenue for the third quarter was $102 million, an increase of 22% from the prior year primarily reflecting increased rating activity for U.S. collateralized loan obligations or CLO. U.S. and non-U.S. revenue increased 31% and…

Thanks, Linda. First, I would like to provide a brief recap of the regulatory update that we provided at Investor Day. In the U.S. in August, the SEC voted to adopt its final rules for NRSROs as required by the Financial Reform Act. The final rules closely track the proposed rules, which had been published in 2011. In anticipation of the final rules, Moody’s has made substantial technology and other investments over the past several years. Consequently, we will be in a position to implement the relevant compliance obligations by the SEC’s deadlines. Turning to Europe, certain of the provisions of CRA3 are subject to further rulemaking. The next round is expected to conclude by the first quarter of 2015 and will include certain reporting requirements and disclosure obligations. On a separate note, for the third year in a row, Moody’s Investor Service was voted the best credit rating agency in the 2014 poll of U.S. fixed income investors conducted by the well-known publisher, Institutional Investor. MIS was also again named Asia’s most influential credit rating agency in a similar poll conducted by the publisher, FinanceAsia. Moody’s Analytics was named the best regulatory capital calculation management provider and the best asset and liability management provider by Asia Risk Technology Rankings. I appreciate the markets recognition of our efforts and I applaud the accomplishments of both the MIS and MA businesses. Finally, I would like to discuss the changes to our full year guidance for 2014. The full list of Moody’s guidance was included in our third quarter 2014 earnings press release which can be found on the Moody’s Investor Relations website at ir.moodys.com. Moody’s outlook for 2014 is based on assumptions about many macroeconomic and capital market factors including interest rates, corporate profitability, business investment spending, merger and acquisition activity,…

(Operator Instructions) And we will take our first question from Alex Kramm with UBS.

Hey, good morning or hello everyone actually. I wanted to just talk about the current business and what you are seeing out there, I mean clearly with all the volatility in markets the issuance has slowed down a little bit in October. So, maybe you can talk a little bit more about what you are seeing out there where you talk to defs and obviously how that has impacted your guidance, you obviously lowered a couple of items, so are you feeling still very confident in making that guidance this year or does the current outlook concern you a little bit more here? Thanks.

Alex, it’s Linda. Let me talk a little bit about what we are hearing from various defs and then I will let Ray comment on his thoughts about that. For investment grade we have had a very good settling of the market since last week. Last week did see in the U.S. reduced investment grade issuance of only $6 billion. This week and I just checked before I came upstairs it’s probably going to be a $20 billion week, a little bit better. Next week looks to be the same or a little bit better. What we are seeing now is that pipelines are robust. The pipelines are quite strong. We are expecting a heavy fourth quarter in investment grade because we have $100 billion of M&A pipeline that needs to be financed before the end of the first quarter in 2015. So investment grade looks like it stabilized and looks quite strong. High yield did take a step back last week and had only one deal priced last week. This week it’s been quite a good bit healthier though. So I think we characterize state of the high yield markets as improving. And we have seen some transactions that are looking ready to come next week so that’s good. The pipeline would be viewed as average however. And on leverage loans we also see an average pipeline and we do see perhaps $20 billion in leveraged loans for October. So again that pipeline is looking a little bit on the average side as well. So, very good strength in investment grade, a lot of backlog there and high yield and leverage loans looking more on the average side. So with that, I will let Ray translate that for you.

First of all, I think we do feel pretty confident with our outlook for full year. Certainly we are cognizant of the volatility that we have seen in the market recently. Not surprising, we have been dealing with this for quite a while and so there are periods where the market – the pipeline slows. So, it’s really not a question of the pipeline as much as it is whether that pipeline is pushing forward. And as Linda described, we see particular strength in investment grade and more average pipelines in the spec grade bond and loan areas, so really just underscoring Linda’s comments.

Okay, great. And then maybe just as my follow-up here maybe a little bit more detail, but on the recurring revenue in MIS, that’s obviously been a nice stable driver and I think Linda you mentioned that in your prepared remarks this quarter, I think 10% year-over-year growth. More interesting though what I noted is that quarter-over-quarter, so down from the second quarter, recurring revenues actually declined a few million, I think in corporate and structured. So, I think this was the first time we saw that in several years. So, I usually think about recurring revenues as kind of building on top of each other. So, maybe – was there anything particular that was going on this quarter or why would that be coming down? Thank you.

Sequentially, Alex, you are adding 500 if I can say that on CFG in the second quarter, we had $82.4 million of relationship revenue and it was down to $80.7 in the third quarter in structured, however, we had $40.6 million and we are up to $41.5 million. I wouldn’t take too much away from that quarter-over-quarter and I’d ask Michel to comment if you think there is anything of particular to note in that, but we do have new rating mandates coming online. And as we said as those come into our stock of monitored ratings, they do add to that recurring revenue total, but I don’t think there is anything particularly unusual going on quarter-over-quarter. Michel, anything you would like to add?

No. I mean, I would say I was going to say the same thing really nothing to point to any sort of structural change and the positive momentum from additions to the portfolio continue and so, no, nothing to add. There maybe a ForEx element here that you may want to comment on that, Linda, but….

The foreign exchange element was not material, so that really wasn’t a driver, but the trend we believe is going to continue to see increases in the recurring revenue. And it really follows on from the new rating mandates that we are getting and that turns into monitoring fees in the forward years. So, we do expect the trend – upward trend to continue.

Okay, fair enough. Just I was stuck out a little bit to me, but I appreciate it. Thank you.

And we will move to our next question from Manav Patnaik from Barclays.

Hey, good morning, afternoon I guess. The first question I had was I guess the two things that I guess supposed change from the Investor Day, which is I guess the slightly more negative European outlook, and then recently I guess we had those risk retention rules signed on the structured side. I was just wondering if you guys had a view on those risk retention rules and how that might impact the structured business, especially in the U.S.?

Yes. We obviously have been watching the risk retention rules and the fact that the various regulatory authorities approve those rules earlier in the week has caused quite a bit of commentary in the market in anticipation of what this may mean. Certainly, in the near-term, we don’t see any significant impact. There are periods 1 to 2 years before the risk retention rules become effective after they are published. In the longer run, we would anticipate that there will be at least some modest impacts. The way, the risk retention rules have been developed are going to affect different asset classes differently. So, for example, we might anticipate some of the smaller CLO arrangers and issuers to be less active, while the larger ones that have more capacity to deal with the risk retention would probably remain active. The only other comment I would make on this, because really I think there is a lot of uncertainty about exactly how the market is going to deal with these risk retention rules and how that markets reaction will evolve, but to the extent that it decreases activity in certain parts of structured finance, I would anticipate that’s going to increase activity in other parts of the market. And so there is going to be an offset. For example, if there is some reduction in CLO activity, we may see an increase in us high-yield bond activity. So, we will have to watch and see, but we have got – we have got a fair amount of time before these rules become effective. As far as the European outlook, let me ask Michel if he would comment on that.

Thank you, Ray. Well, in Europe, I think we do see effectively a macroeconomic situation, which is not – obviously not very favorable and that has an impact on some of the activities we see. We as you may have seen from our guidance and our numbers, some of the adjustments were made in Europe in CFG and structured finance. So, if there is clearly a slower pace and that is something we have seen last quarter and we anticipate to see in the next quarter.

Okay, thanks. And just one more on ERS, I guess how much of the improvement on the top and bottom line I suppose was due to timing versus an actual acceleration in these underlying trends?

Yes. Mark, you want to?

Sure. Well, the top line was very much a function of timing. We – a lot of the revenue we have recorded in the quarter was the result of our completing projects and recognizing the associated revenue. So, that was certainly an element of what was going on, but it was a very strong quarter across the board, across all of our product lines in our various delivery mechanisms in ERS. We haven’t disclosed anything on the ERS bottom line. So, I am not sure that I have much I can offer you on that.

Alright, thanks guys.

And we will move to our next question from Bill Bird with FBR.

Yes, good morning. Also on MA, I am sorry if I missed it, but what was the segment’s organic growth and was there anything unusual driving the higher profit pull-through on revenue growth in MA in the quarter? Thank you.

We – well, the organic growth was about two-thirds of total growth. So, we reported we were up 20 – about two-thirds of that is organic. So, the organic number was very strong. And the improvement in the margin I think is largely attributable to the contribution from of the Copal Amba business, but – and I don’t think that reflects all that much frankly about the longer term efforts that we are making in Moody’s Analytics and in ERS specifically to drive margin. That’s going to be a longer term effort that we will play out over a period of years. And I would just add in terms of the organic growth that we had double-digit organic growth in each line of business within Moody’s Analytics. So, it was very strong performance across the board.

And then separately just to follow-on on Europe, which is be curious of your perspective on the new ABS and covered bond purchasing program and how you see that impacting the European structured business?

Yes, I will offer a comment and if Michel wishes to add anything, I will invite him to do so. Really, we don’t see it having a large impact on the market. Yes, I think it would have a more significant impact if the issue were around – if the issues were around liquidity and the availability of liquidity, but that has not really been the principal issue. I think it’s more of a supply demand issue. And so while this is probably going to be helpful at the margin, I don’t think it really gets to the heart of what’s causing the European structured market, covered bond market to be soft. And Michel, if you have anything to amplify my comments please do?

No, not really.

Okay.

Thank you very much.

Thank you.

And we will take our next question from Joseph Foresi with Janney Montgomery Scott.

Hi. First sort of a big picture question, we have seen I guess interest rates move down a little bit over the last couple of months. How should we think about the relationship, I know what part of this answer is going to be, but how should we think about the relationship I know what part of this answer is going to be, but how should we think about the relationship between interest rates and sort of what you are thinking about for a growth rate for next year. In other words if they tick down should we be more encouraged for a growth rate or less and how should we think about that?

Yes. We have talked about this some before and my views at least have not fundamentally changed. Certainly interest rates being as low as they are encourages more opportunistic financing, pre-financing. And it’s also encouraging I think the speculative grade market because of the reach for yield, so lower quality credits that are offering higher yields are attractive. But we really – I think we would actually benefit from seeing some more economic growth globally in terms of issuance activity and more issuance for capital expenditure. We have seen a nice uptick in borrowing for mergers and acquisition activity and some of the temporary financing around M&A should turn into more permanent financing in 2015 and that’s probably a positive. But again, the borrowing for business expansion, capital expenditure is really not strong and the slowdown particularly in Europe, but also some concerns about Asia I think is going to be – have an impact on whether we are going to get these other elements of issuance to be more active.

Joe, its Linda, just a couple of quick follow-ons as we started the call this morning the tenure in the U.S. is about 2.25. The Blue Chip Forecast for next year, the median scenario was about 3.25, but there is also a strong view that perhaps the lower end of that forecast that has the tenure at about 2.8 might actually prevail. But this sort of range is a bit of a sweet spot for us and as we said we see very strong investment grade pipelines. And we just need a little bit of calm in order to have better conditions in high yield and leverage loan markets. So U.S. treasuries still are a much higher yielding security than European bonds at this point. And we think that that demand for U.S. treasuries is going to in that immediate term keep interest rates relatively close to where they are. So we think that presents quite a reasonable outlook for us. But you are right it does appear that rates may be lower for longer than had been feared earlier this year.

Got it. I mean just to summarize, I am clear. So ultimately the drop in rates is an incremental positive if the macro remains steady then we should think about that as incrementally positive outlook for next year, is that fair?

Well, I mean this is somewhat speculative.

Okay.

But I would say probably the best condition for us would be modest increase in rates, if that is the result of more confidence in the business environment. So the rates where they are now to the extent they are reacting to geopolitical conditions and weakness in Europe certainly provide attractive financing rates. But absolute rates, it’s difficult to envision a scenario where absolute rates are not pretty attractive in 2015 anyway. So I wouldn’t mind seeing the rates move up a little bit with more business confidence.

Got it. Okay. And then just last one for me. Obviously we talked about the organic growth rate in the analytics business. When we look at that aggregate rate going out past the next couple of quarters, is there a step up in the organic once you include those acquisitions going forward and how should we think about the long-term rate in that business or growth rate in that business?

Well, I think that we would expect our organic growth rates all things being equal to remain around where they are today. Of course there is a lot that can happen that will influence that particularly when it comes to the movements in currencies and things like that. But as I said all things equal, we would expect to be able to sustain our current level of organic growth.

Thank you.

And we will move to our next question from Craig Huber with Huber Research Partners.

Yes, hi. Thank you. My first question, Linda, just a general housekeeping question, can you help us breakout four ratings areas, the revenue is finer, corporate finance, high yield bank loans, investment grade etcetera in the quarter?

Sure, Craig. Starting first with corporate finance, investment grade for the quarter is $39 million, which is 15% of the total line of $260.7 million for corporate. Spec rate is at 54.5% or 21%, bank loan $62 million, 24% of the total line, and other accounts at $105 million. The big news there would be the strong growth in the investment grade lines and also strong growth in the spec grade lines. And it maybe puzzling we have heard a lot of questions from analysts this morning as to how can it be that those two lines have been down in terms of what they are looking at in terms of issuance activity and yet revenue is up. So, we would comment our usual caveat that it’s very hard to track our revenues from issuance and trying to do it is obviously a challenge. On the investment grade side, the difference would be that last year we had the Verizon deal, which was $49 billion in the third quarter numbers. If you take that out, U.S. investment grade issuance is actually up 17% in the U.S. and mix is important to us. More smaller deals are better for us. And in high yield, the situation is about the same. We saw fewer jumbo deals from last year and particularly in EMEA we saw better revenue yield, because of smaller deals which are helpful to us. So, again, just looking at the headline issuance numbers are going to help you, you have to look at the deal size and what was going on in the previous year. With those comments, I will move on to structured finance. Total was $102 million for the quarter. Asset-backed we saw $23 million and that’s about 23% of the total; RMBS $18.3 million, 18% of the total; commercial real estate 26.9% or 26% of the total; and structured credit, 33.8% or 33% of the total. And here are the big drivers in structured credit, which has moved up to $33.8 million from $20.1 million last year. That’s all about the growth in CLOs and that sector has been very strong for us in structured, but seeing global structured up 22% is a nice change and we are very pleased about that. Moving on to financial institutions, total for that line is $91.8 million, banking is $60.7 million of that or 66%, insurance $27.1 million or 30%, and managed investments $4 million, about 4%. And there we saw good growth both in the banking and the insurance line as we have commented previously. And public project and infrastructure, total of $88.5 million, $40 million from public finance and sovereigns, 45% of the total; munis about $4 million or 4% of the total; and project and infrastructure about $44.8 million, 51% of the total; and there in PFG and sovereigns we saw good growth year-over-year. So, that’s the story on the rating agency.

Appreciate that. And then also can you just give us the incentive comp number in the quarter?

Sure. Hang on just a second. Incentive compensation for this quarter was $46.8 million and we did increase that a bit from last quarter’s $44.2 million. That came with the change in guidance and we saw that we had – we have pretty good performance. For the fourth quarter, I would suggest that you would model somewhere between $40 million and $45 million. It depends how we do and that number is going to move around depending on how we do for the end of the year.

Okay. And then also I’d like you to ask rate yourself, what do you think needs a change in the marketplace right now to kind of see RMBS pick up significantly from here in the U.S.?

Yes. I mean, right now, it looks as though it’s policy driven as much as anything having to do with market conditions or market forces. The role of private label mortgage-backed securities is – remains very small. And probably the most expedient way to grow that market would be if there were lower limits on qualifying mortgages that would go into Fannie and Freddie, but I am not aware of any moves to make that happen. So it looks like that the U.S. RMBS market at least is going to remain relatively soft. In Europe, again the securitization market in Europe has been broadly soft for some time now. Policymakers would like to see more activity. They are certainly talking up a resumption of that market. But to the extent that their tools are dealing more with liquidity than they are with supply demand they are probably going to have limited impact, so we are waiting for change in market sentiment in Europe as opposed to the U.S.

One last housekeeping question, Linda the tax rate as you think out to next year, are you thinking it should be similar to 33% you are talking about for this year or more like the mid-31s, 31.5 or so that you have in the last couple of years?

Craig, it’s a little bit too soon to start talking about the tax rate for next year. We would note though that the tax rate for this quarter moved up quite a bit. We had been at about 29.5% from last year and we were up to 33% for this quarter, which had to do with some discrete items and so on. So we are expecting a little bit of this continuing in the fourth quarter. But for next year we are going to have wait and see what everything looks like next year. We have got a kind of reset on where we are generating our income and what that means, so not going to venture as far as next year?

And to the extent that we are seeing stronger economic conditions in the U.S. than we are in our international business it’s going to be tougher to get low tax rate. So we are – just a small cautionary note there.

Okay. Thank you.

And we will move to our next question from Tim McHugh with William Blair & Company. Tim McHugh - William Blair & Company: Yes. Thanks. Just want to ask on the financial institutions group, the strength you saw there I understood I guess where it was coming from, but is there anecdotal explanation I guess for why you saw that strength I guess something particular happening amongst that client group?

Well, it was largely European and Asian financial institutions that are not frequent issuers accessing the markets there and taking advantage of market conditions. And they are since they are not frequent issuers more of those institutions would fit into our per issue pricing program than the frequent issuer. So we see more of an uptick when those per issue institutions are active and that’s what we saw in part in the third quarter. I would also just point out we saw strength in the U.S. insurance sector and that related in part to M&A activity and funding for that. Tim McHugh - William Blair & Company: Okay. And then also somewhat earlier I guess you mentioned the U.S. more small customers are better than – more small deals better than big deals. I guess in a rough sense I guess what’s the range as you think about the fees might get from a typical I guess dollar of issuance between larger transactions versus more smaller transactions making up that mix?

Tim we don’t like to go too much into pricing, I think we would say the 5-ish basis points we get on investment grade deals that service us very well and we think provides good value for the issuers as well. On larger deal particularly, deals as large as Verizon we wouldn’t apply that same basis point level to a deal of that size. So I wouldn’t make an overall judgment thereon on what the price yield would be on those, but 5-is basis points on per issue pricing would be about right. Tim McHugh - William Blair & Company: Okay. And I guess lastly, it seems like you expect a decent size expense ramp in the fourth quarter and although it’s seasonally higher but is there anything in particular going on in terms of investment spending in Q4?

Right. And I was hoping someone would ask that, so we could clarify this. We do still expect expenses to ramp $80 million to $90 million from the first quarter to the fourth quarter. And in the first quarter, we were mentioning we had $434 million. I also was looking last year in 2013 expenses also ramped up 13% fourth quarter versus the third quarter. So, the primary issue here which I don’t think everybody have thought about is going into fourth quarter, we are picking up the operating expenses for ICRA, which is majority ownership of the Indian rating entity and WebEquity, which we acquired in July. So, the two of those together and again this is the first full quarter when we will have those that’s $20 million that we are adding to expenses just right there. Consulting and IT will probably add little bit shy of $20 million. And if we come in according to where we think we will with our guidance, incentive compensation will be about $10 million. And typically, the T&E bills are a little bit higher as we get into the fourth quarter as everybody is trying to get the final implementations, particularly in the MA business completed. So, I think that explains the majority of it, but the analysts may not be thinking about the fact that we are picking up the ICRA expenses and the WebEquity expenses. And you are right we do have a seasonal ramp in the fourth quarter. We may do a bit better than that, but we don’t want to promise that, because we are not really sure and you have got to think about the incentive compensation piece of that as well. Tim McHugh - William Blair & Company: And just relative to the added expense from ICRA and WebEquity, is $12 million or what’s the right idea I guess for the revenue being added in from ICRA? And then I mean you gave the WebEquity for partial quarter this quarter I guess, but….

Yes. In terms of ICRA, where I don’t think we want to get to a specific number, because ICRA is a public company in India and we don’t want to be front-running any communications that ICRA has to be making. And so we are going to out of an abundance of caution, we are not going to disclose a fourth quarter expectation. Tim McHugh - William Blair & Company: Is it the right way still you are accounting for that with a lag in the quarter, correct?

Yes. We still have that quarterly lag, yes. Tim McHugh - William Blair & Company: Okay, thank you.

And we will take our next question from Peter Appert with Piper Jaffray.

Thanks. Ray, do you sense that you guys are gaining perhaps a little bit of market share this year and there are any asset classes you would call out where you think you might be getting some share?

We had pretty comprehensive coverage in the market. As you know, Peter, structured finance is always a source of variability in coverage and it so happens that areas where we are particularly strong have been active in structured finance. So, yes, I would say that our coverage – our relative coverage has probably improved compared to our competitors. And we have been active in rating CLOs and CMBS and we will do our best to make sure that we maintain both high coverage and high quality in the ratings.

Alright. And Linda, FX presumably is going to be much more of a headwind in the fourth quarter, how should we think about that?

It’s hard to think about FX going forward, Peter. We were concerned about it. And then the dollar/euro sort of returned to where it had been. It’s little tough to tell how that’s all going to pan out, but I don’t think it’s going to be a huge piece of input for us. One note Peter on the expense line that we heard some questions on earlier this morning, the interest expense, which you can see in the tables accompanying the earnings release, was $39 million in the third quarter. And the reason for that was $11 million of cost as we paid our 2015 private placement early – a year early. So, we had some cost associated with that. So, I just wanted to call that out so that the analysts and the investors can see it.

Yes. Just one other comment on FX, Peter, a substantial part of our international billings, are in euros and a substantial part of our international expense is in pounds, where we have our largest operation outside the U.S. So to the extent that euros and pounds are moving in the same direction and we have bit of a natural hedge there. So if they do not move in the same direction that’s where FX could become more material to our results.

Got it. Thank you.

And we will move to our next question from Bill Warmington with Wells Fargo.

Good afternoon everyone. So Linda just to continue on the interest expense question if that – if you back out $11 million, it’s about $28 million in interest expenses, is that a good rate to use going forward for Q4?

Yes. I think that’s probably a pretty good build. We did do the financing in July so you have to consider that we have increased the run rate on that to include that financing even though that was done at very attractive rates it does add a bit interest expense for you.

30 your money, very attractive.

5.25.

Now, I am seeing the headline here 25 Eurozone banks said to fill stress test and so my question is with that are you seeing an acceleration in demand for stress testing in the U.S. and Europe?

Well, I think the short answer is yes. Absolutely, but it’s I think we would also be cautious in saying that the stress tests that are being conducted are a principal driver of demand for our risk management services and our stress testing capabilities in particular. They play a role, but there is a broader increase in the attention to risk measurement and risk management that’s going on beyond just these point-in-time stress testing. Mark, I don’t know if there is anything you want to add to that?

No, I think that’s right. I think it – the results, the specific results of the stress test aren’t all that meaningful for us, it’s really the existence of the stress test in the way that stress testing is being integrated into regulatory supervision of banks in the U.S. and now we are seeing it in Europe is a good driver of demand for the kinds of things that we offer to banks.

Got it. Okay. Thank you very much.

Thanks.

And we will move to our next question from Vincent Hung with Autonomous Research.

Hi, good afternoon. Maybe I missed this but could you provide any color on the ERS project pipeline?

It remains good. It’s – we have – we are at the heart of work on a lot of projects with a lot of customers around the world. I think it’s very consistent with what we have been talking about and what we have talked about at Investor Day. We continue to think that ERS will be the fastest growing business in Moody’s Analytics.

Okay. And is there any commentary on how the regulator and compliance costs have trended this quarter?

As we have communicated previously we think the incremental costs this year will be less than $5 million maybe up to $5 million. But that as you can tell it on the incremental component for the quarter would not be substantial.

Okay, great. And lastly it’s just more of a longer term question around high yield issuance, but clearly if I look at your revenues, they have grown in tandem with the mix shift in total debt issuance, so more high yield issuance and it keeps getting harder to argue that mix will continue to increase towards greater high yield issuance, because we are currently running at about 8% high yield issuance, the total debt issuance for the year-to-date and pre-crisis it was 3% and clearly some of that is going to be supported by the positive backdrop of low rates and disintermediation, but how should we think about how that trends going forward?

Yes. There are both cyclical and structural features to the high yield – the growth in the high yield market. And when we talk about high yield broadly I would include both leverage loans and high yield bonds. But the – and so cyclically, yes low rates have caused a lot of opportunistic financing that’s already been largely accomplished. The good news is that once institutions are in the market with financings that increases the volume that will be refinanced in the future. And so that’s a very good news story. But structurally, the conditions and changes that are going on in the financial institution sector globally in terms of capital adequacy and stress testing and risk management and curtailment of certain business activities that are creating profit pressures, all of that is encouraging disintermediation and a lot of that is for non-investment grade parts of the market. Those are the institutions that historically would have been either largely or exclusively in banking relationships rather than in the bond markets and they are going to the bond markets now, certainly in the U.S., but also a big opportunity in Europe.

And Vincent, we would also note and call your attention to what we have said earlier, this $100 billion backlog in M&A take-out financing, much of that is high yield. M&A activity generally tends toward being high-yield activity and that’s quite good for us. And we have again very nice conditions here with the equity markets at highs and financing costs relatively low and we were just looking at M&A activity if it’s very much, very much at a high point right now, which is very helpful to us. The other thing I would add is that this forecast, this guidance does incorporate the view though that activity in Europe is still weakish, not very strong. And that would be the place that Michel had commented on earlier, where we do see a little bit more concern about what’s happening there, but we do see good activity here in the U.S. We are trying to put those two things together in considering our guidance. The one other thing I would remind everyone regarding our guidance, the acquisitions we have done this year and WebEquity together on a GAAP basis are $0.05 dilutive to the GAAP earnings outlook for this year, so just something for everyone to keep in the back of their minds. I think there is some question as to why we didn’t do something more with guidance? Today, we would note it’s only been 24 business days since we had our Investor Day, so just trying to keep everything in balance here.

Okay, thank you.

And we will take our next question from Patrick O'Shaughnessy with Raymond James.

Hey, guys. We continue to hear complaints in the corporate bond market about the lack of secondary market liquidity. And so far, it does not seem like that has impacted the ability of companies to go to the market and issued debt. Could you foresee a scenario in the future though where that lack of secondary market liquidity does become an issue? And to the extent that it does, what sort of role can Moody’s play in maybe helping that liquidity better develop?

Patrick, I don’t think that it causes any hesitation in companies coming to the market. What is interesting for companies that have well-aged bond deals and then bring new debt to the market, sometimes those new deals can trade tighter than the old deals, because there is more of these newer securities then in inventory. So, that’s a curious fact, but one that is happening quite a bit. The other thing we would note is this last Wednesday when the tenure traded down to 1.87, there was a view that a lot of that unusual decline was because capital markets suggest that various firms are not holding the same sorts of bond inventories that they did before to act as a shock absorber as rates move around. So, that would be another factor that we would call attention to. We don’t think though that, that has any impact on issuance at this point. Issuance even as recently as yesterday, Verizon brought a $6 billion deal yesterday and it went very nicely. So, I don’t think we see – we could see any impact on issuance, but I’d invite Ray and perhaps Michel to comment.

No, that’s nothing to add to that, Linda. That was very complete. I don’t know Michel, if you have anything you would like to add, please do.

No, nothing from my side.

Alright, great. That’s all from me. Thank you.

Thanks, Patrick.

And there are no further questions in the queue at this time.

Okay. Just want to thank everyone for joining us on the call today and we look forward to speaking with you again in the New Year. Thank you.