S&P stated in its letter of July 24th that some of the recommendations by the SEC are too costly to implement and some are beyond SEC’s mandate.  S&P estimates the cost of compliance would cost US$ 57 million initially, plus US$ 16 million each to implement, which is higher than what the SEC had estimated.

McGraw-Hill announced last week its Q2 results.  Revenues for financial services declined 10.4% to US$ 735.5 million compared to the same period last year.  Revenues for S&P’s Credit Market Services (independent global ratings) declined by 20.1% to US$ 507.9 million.   Revenues for S&P’s Investment Services (Value added financial data) increased by 22.8% to US$ 227.6 million.  Management stated that revenues for Financial Services could be off 7% to 9% in 2008 if the decline of the first half continues for the remainder of the year (see page 16).

S&P is setting its sites on a greater diversification of its product portfolio.  The underlying fundamentals of S&P’s analytical services are good.  Many of its value added product lines showed continued growth in 2008.  The company maintains its guidance for 2008.  Sources:  SEC Website and McGraw-Hill Companies Q2. Earnings Release

BIIA Newsletter July / August 2008 Issue