Report Interpretation

Overview

Goldman Sachs reviews August global debt issuance and concludes that a rebound in US investment-grade activity has strengthened the 2026 outlook for S&P Global and Moody's ratings businesses. The firm reiterates Buy ratings on both companies, emphasizing AI-infrastructure financing, refinancing demand through 2029, and each company's broader business strengths.

Core views

Global debt issuance contracted 1% year-on-year in August, a marked improvement from the 22% decline in July, although below the 16.9% growth recorded in the first half of 2026. Year-to-date global issuance remained up 12%. Monthly issuance was volatile amid geopolitical and macro uncertainty: weekly global issuance was down 7% year-on-year in the first week of August, then rose 19% and 8% before declining 11% in the final week. Goldman Sachs characterizes the August outcome as a modest improvement rather than a return to the stronger first-half pace. The improvement was concentrated in investment grade. Global investment-grade issuance rose 54% year-on-year in August, while corporate leveraged-loan issuance fell 71% and high-yield issuance fell 64%. Structured-finance issuance declined 4%, whereas financial-institutions issuance increased 35%. The report notes that leveraged-loan and structured-finance data usually lag other debt categories by one to two weeks, so final reported growth rates may prove higher. Regionally, North American issuance declined 7%, versus 9% growth in EMEA and 19% growth in APAC. North America's result reflected a 72% drop in corporate leveraged loans and a 63% decline in high yield; EMEA was aided by 48% investment-grade growth and 59% leveraged-loan growth; and APAC benefited from 102% structured-finance growth and 36% financial-institutions growth despite weaker corporate debt issuance. Goldman Sachs' credit strategists raised their 2026 US investment-grade gross-issuance forecast to $2.3tn from $2.1tn because issuance stayed well above historical levels through the summer and is tracking 30% higher year-on-year. AI-related issuers account for 24% of US investment-grade supply, while M&A financing and scheduled maturities provide additional support. The team continues to forecast $400bn of US high-yield issuance, €850bn of euro investment-grade issuance, and €125bn of euro high-yield issuance for 2026. Together, these US and European IG/HY forecasts imply about 19% constant-currency growth in 2026, up from about 12% under the previous US IG forecast. Goldman Sachs cautions that this measure excludes APAC, leveraged loans, financial institutions and structured finance, so it is directional rather than directly comparable with its global forecast. For 2027, the preliminary US IG forecast is $2.4tn, about 4% growth. The firm continues to forecast mid-single-digit global debt-issuance growth in 2026 and believes the revised US outlook creates upside potential to that view. This financing activity matters directly to the two rated issuers because ratings revenue has historically moved closely with global debt issuance: the report cites correlations since 1Q2008 of 85.9% for SPGI Ratings revenue growth and 89.0% for Moody's ratings revenue growth. In 2Q, Moody's Investors Service revenue grew 25% year-on-year and S&P Ratings revenue increased 17%, driven by refinancing, AI-related investment, private credit, digital finance and infrastructure funding. AI-related capital spending is a central demand driver. Moody's said hyperscalers had issued more debt year-to-date than in the preceding three years combined as data centers, power, construction and broader infrastructure require financing. S&P Global similarly lifted its 2026 estimate of hyperscaler issuance from about $200bn to $250bn-$300bn. Moody's reaffirmed high-single-digit 2026 MIS revenue-growth guidance, while S&P Global raised 2026 Ratings OCC revenue-growth guidance from 4%-7% to 5%-8%. Goldman Sachs estimates both MCO MIS revenue and SPGI Ratings revenue will rise 8% in 2026. Goldman Sachs reiterates Buy on both stocks. For SPGI, the $528 12-month target is based on 24.0x the firm's NTM+1-year EPS estimate of $21.99, above the 16.5x information-services peer median. The premium reflects execution history, proprietary and essential data, a wide competitive moat and higher EBITDA margins than peers, alongside diversified growth in Market Intelligence and Indices. For MCO, the $593 12-month target is based on 29.0x NTM+1-year EPS of $20.43, also above the 16.5x peer median. Goldman Sachs attributes the premium to Moody's competitive moat, ratings exposure to secular tailwinds, AI positioning and the growth outlook for Moody's Analytics.

Analysis framework

The report starts with monthly global debt-issuance data, decomposes it by debt category and region, then updates the credit team's 2026 issuance forecasts. It links issuance conditions to ratings revenue using historical correlations and recent company results and guidance, before applying forward P/E target multiples to SPGI and MCO earnings estimates.

Methodology notes

• Industry AnalysisSupply-demand framework

  Debt-issuance volume tracking by product, region and financing driver

  The report treats issuer financing needs from AI investment, M&A and refinancing as drivers of debt supply, then assesses how changing issuance volumes feed into ratings demand and revenue.

• Valuation methodsP/E and PEG Valuation

  Forward P/E target-price valuation

  Goldman Sachs values SPGI at 24.0x NTM+1-year EPS of $21.99 and MCO at 29.0x NTM+1-year EPS of $20.43, comparing both target multiples with a 16.5x peer median.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• S&P Global Inc. (SPGI)

  A ratings-revenue beneficiary of improving global debt issuance and AI-related financing.

  Strengths

  Diversified growth across Ratings, Market Intelligence and Indices; proprietary and essential data; wide competitive moat; higher EBITDA margins relative to peers.

  Comparison

  The $528 target uses 24.0x NTM+1-year EPS of $21.99, above the information-services peer median of 16.5x.

  Risks

  Moderation in debt-issuance growth; financial-services budget and headcount pressure affecting Market Intelligence; a market pullback affecting Indices; FX risk.

• Moody's Corp. (MCO)

  A ratings-revenue beneficiary of refinancing, AI-related financing and secular ratings demand.

  Strengths

  Wide competitive moat, leverage to ratings tailwinds, AI positioning and an attractive Moody's Analytics growth outlook.

  Comparison

  The $593 target uses 29.0x NTM+1-year EPS of $20.43, above the information-services peer median of 16.5x.

  Risks

  Macro uncertainty; slower M&A volumes; higher interest rates; buy-side and sell-side budget pressure; ineffective AI-strategy execution; FX risk.

Key data

• Global debt issuance growth, August 2026-1% y/yImproved from -22% in July; global issuance was up 12% y/y year-to-date.
• Global investment-grade issuance growth, August 2026+54% y/yOffset continued weakness in leveraged loans and high yield.
• Global leveraged-loan issuance growth, August 2026-71% y/yCorporate leveraged loans remained the weakest major category.
• Global high-yield issuance growth, August 2026-64% y/yHigh-yield issuance remained weak in August.
• US investment-grade gross-issuance forecast, 2026$2.3tnRaised from $2.1tn; issuance is tracking 30% higher year-on-year.
• AI-related share of US investment-grade supply24%A major contributor to the upgraded US investment-grade outlook.
• Combined US and euro IG/HY issuance growth implied for 2026Approximately 19%Constant-currency basis, up from about 12% under the prior US IG forecast; not directly comparable with the global forecast.
• SPGI Ratings and MCO ratings-revenue estimate, 2026+8% eachGoldman Sachs estimate for SPGI Ratings revenue and MCO MIS revenue.
• SPGI target price$528Based on 24.0x NTM+1-year EPS of $21.99.
• MCO target price$593Based on 29.0x NTM+1-year EPS of $20.43.

Impact & implications

The report argues that stronger investment-grade financing, especially from AI infrastructure, M&A and refinancing, should support ratings activity and revenue at S&P Global and Moody's. It sees the refinancing pipeline through 2029 as a medium-term underpinning, while SPGI's Market Intelligence and Indices businesses and Moody's Analytics provide additional company-specific support.

Risks

• For SPGI, debt-issuance growth could moderate, financial-services budgets and headcount could pressure Market Intelligence, a market pullback could weaken Indices growth, and FX is a risk.
• For MCO, Goldman Sachs cites macro uncertainty, weaker M&A volumes, higher rates, budget pressure, AI-strategy execution risk and FX risk.

What to watch

• US investment-grade issuance relative to the revised $2.3tn 2026 forecast and the preliminary $2.4tn 2027 forecast.
• The contribution of AI-related issuers, which represented 24% of US investment-grade supply, and hyperscaler issuance expected at $250bn-$300bn in 2026.
• The persistence of refinancing, M&A and infrastructure-financing activity through 2029.
• SPGI Ratings OCC guidance of 5%-8% growth and Moody's reiterated high-single-digit MIS revenue-growth guidance for 2026.
• Whether weak leveraged-loan and high-yield issuance recovers as delayed data are finalized.