The McGraw-Hill Companies Reports 11.9% Growth in 2nd Quarter
Continued growth in the number of exchange-traded funds (ETFs) based on S&P indices and a 41.1% year-over-year increase in assets under management in these ETFs contributed to a strong performance by the Benchmarks Group in the second quarter. Reflecting the recovery in global markets and an inflow of new funds from investors, assets under management in ETFs linked to S&P indices grew to $325.3 billion at the end of the second quarter. Sixteen new exchange-traded funds using S&P indices were launched in the second quarter, bringing the total currently based on S&P indices to 349. At the end of 2010, there were 301. The Benchmarks Group also benefited from growth in data sales and the creation and licensing of a dozen new custom indices for major clients in financial markets.
Standard & Poor's: Revenue for this segment grew by 18.6% to $480.3 million in the second quarter compared to the same period last year. Operating profit, reflecting increases in compensation and incremental compliance and regulatory costs, grew by 17.3% to $212.7 million. Favorable foreign exchange rates increased revenue by $14.8 million and operating profit by $2.1 million in the second quarter.
Continued strong investor demand for yield and brisk refinancing activity, especially by non-investment-grade companies taking advantage of low interest rates, were key to a 56.9% increase in new dollar volume issuance to $208 billion in the U.S. corporate bond market in the second quarter.
European corporate issuance also showed solid growth, increasing by 32.9% to $270.4 billion in the second quarter as investors sought quality credits with attractive coupons. Structured finance remained soft, although there was increased activity in Europe and a pick up in U.S. ABS issuance along with modest improvement in U.S. commercial mortgage-backed securities and U.S. CDO markets.
A 69.3% increase in global high-yield new issue dollar volume to $119.2 billion, solid gains in the investment-grade market, and booming global bank loan rating activity contributed to the 31.4% increase to $195.7 million in Standard & Poor's transaction revenue in the second quarter despite softness in U.S. public finance issuance. Public finance dollar volume issuance declined 32.7% to $77 billion. Dollar volume in public finance was lowest for the second quarter in a decade, but the second quarter improved sequentially by 51% over the weak first quarter of 2011.