Fitch Upgrades Moody's Outlook to Positive on Strong Cash Flow, Market Leadership

Fitch Ratings has revised its outlook on Moody’s Corporation (NYSE:MCO) to Positive from Stable, signaling a potential future upgrade for the credit rating and analytics firm. The agency simultaneously affirmed Moody’s Long-Term Issuer Default Rating (IDR) at ‘BBB+’ and its Short-Term IDR at ‘F1’.

Rationale for the Outlook Change

According to Fitch, the revision to a Positive outlook is driven by Moody's strong market position as a leading global credit rating agency, its increased scale, and its sustained and expanding free cash flow. The rating agency highlighted Moody's consistent financial policies and highly profitable, cash-generative business model.

A key factor supporting the credit profile is the successful diversification into non-ratings revenue streams. Moody’s Analytics now provides a substantial source of recurring revenue, representing more than 40% of the company's total revenue.

Financial Health and Projections

Fitch underscored Moody's solid financial footing, noting the company ended 2025 with EBITDA leverage at a conservative 1.7x. The firm's liquidity position is strong, supported by:

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• More than $2 billion of cash on the balance sheet
• An undrawn revolving credit facility
• A $1 billion commercial paper program

Fitch's rating assumptions project that Moody's EBITDA margins will be sustained above 50% in the coming years, with EBITDA leverage expected to remain below 2.0x. The agency anticipates revenue growth will taper to lower single digits from 2027 onwards, following 2026 results that are in line with management's expectations.

Path to an Upgrade

A future upgrade to Moody's rating is possible if the company continues its growth while maintaining its current margin and free cash flow profile, Fitch stated. The agency expects Moody's to continue returning significant capital to shareholders through dividends and share repurchases, while keeping its credit metrics relatively stable.