S&P Global Inc. (SPGI) Earnings Call Transcript & Summary

Hello, everyone, and welcome to today's webinar. My name is [ Khevna Chhaya ] and as part of the Desktop Business development team, I am responsible for making our self-service platforms more accessible for our clients. I am pleased to moderate today's webinar adapt to the latest market swings with differentiated data. This webinar is the first of a series of 5 different webinars, and I would like to take this opportunity to encourage you to register for all of them to get deep insights into our platform. We know that a lot of you are interested in getting right into it. But before we do, here are a few reminders. We want to ensure that this is an interactive session. And obviously, since we are not in the same room today. If you could give in your questions that would really help us keep things going. So what I'd like you to do is if you see that Q&A button at the bottom of your screen, go ahead and hit that and submit your questions for us. Also make sure you look at the different icons at the bottom of your screen. One of those is the related content widget, which includes some link, which you might find useful during the course of this webinar. it also has links to our platform and other upcoming webinars and you will find our webinar replay portal to access this session and other webinars on demand. This webinar also provides close captioning in English, so please click on the CC icon in the media player to activate it. If you'd like to schedule a private meeting with one of our product specialists or have any further questions, chat with us by clicking on the icon at the bottom of your screen. And last but not the least, a survey will appear at the end of this session. It takes less than a minute to complete, and it does really help us understand what you like, what you don't like and what you'd like us to cover going forward? Now please note that the activities of S&P Global Market Intelligence are independent and separate from the activities of S&P Global Ratings. S&P Global Ratings maintains a separation of analytical and commercial activities. With that, I want to take the pleasure to introduce my colleague, Jud Harmon, who manages our Americas industry specialist team here at S&P Global Market Intelligence. And joining him is another colleague of mine, [ Waqar Azam ], who is a desktop specialist focusing on our capital markets segment. Thank you, Jud and Waqar for joining us today. All right. In the next 30 minutes, we will highlight CIQ Pro datasets and enhancements that eliminate macro and sector-specific trends within key markets being banking and financial institutions, commercial real estate, et cetera. So you, our users can stay ahead of changing market conditions. On that note, Jud, could you start by showing us how would one monitor liquidity and credit trends using the Capital IQ Pro platform.

Yes. Thank you so much, Khevna. Thanks for the introduction. I'd be happy to show you that. Just before I get into everything here, just a few quick housekeeping notes. Just to reiterate, as a subscriber to our Capital IQ Pro platform, you guys have access to 24/7 support. So you can always click on the question mark icon here and leverage our online chat, e-mail or phone support. You also have a dedicated relationship manager who's happy to schedule one-on-one trainings or answer any questions that you have, and you can book meetings with product specialists like myself to go into any of these topics in more detail. One other quick housekeeping note. My screen might look a little bit different than yours. If that's the case, it's likely we just have different profiles we're setting set up under the person icon here. You can alter that in the user profile. But don't be alarmed if it's like that, that's likely the reason. So what I wanted to dive in here -- thanks for the question. In terms of monitoring trends for what's been going on with bank liquidity and some of the potential credit issues the banks might be facing right now. We do have a bank liquidity dashboard that our teams created, a custom dashboard and a link to download this is available in the Resources section. If you all are interested in populating that, you can download it. And then if you click on the 3 dots over here on the right, there's the ability to import -- sorry, here you go, click import and then you can load this dashboard up. What it does is it is pre-populated to monitor a lot of key metrics that people have been looking at for the last 6 months or so in the banking space like deposit outflows, on-hand liquidity, percentage of uninsured deposits as a percentage of total, fair value of held-to-maturity securities, things like that. You have the ability to modify the list of banks in the report. The quick easy way of doing that is just right clicking here and you can add or delete entities individually. But if you have a larger list of companies, what I would really recommend is using the select list feature up here at the top and then you can click a pre-populated save list if you already have one of those created in our platform. If you don't have one yet created and you're not sure how to do that, the way to do that would be to go into this folder icon here, navigate down to list portfolios and screens and then you can click create list or portfolio within here to add companies either individually or screening on certain characteristics like asset size or geographic location. And again, just to reiterate, our support teams can also work with you to get those lists populated and save. So you can have a custom list of companies here with a list of pre-populated fields. These fields are also editable. So you can right click within here and access our field selector. So for example, this report analyzes things a little bit more on the liquidity side. If you're interested in tracking potentially commercial real estate or loan exposure as well or I wanted to add a few other metrics, you can always use the field search up here. You can also navigate under financials. Navigate down to our bank regulatory financials. And within here, we have some highlight sections like common Reg, it's just common regulatory financials. So there's information in here and like loan composition, net charge-offs, noncurrent input loans, things of that nature. And when you expand these columns here, you're able to select, for example, commercial real estate concentration, you can select a time period that you might be interested in looking at: most recent quarter, most recent year or even quarter-over-quarter, year-over-year changes and then click the arrow here to add it into the report and then just click apply, and then that will add into your dashboard here. And any modifications that you make, you can very easily save within here as well. So this is a really good starting point for monitoring. You can log in and have this custom dashboard setup and links to other widgets like news and market data, things like that. Some other things that I would recommend or some of the news and data journalism that our teams have been putting out kind of surrounding this crisis and a lot of other things that have been going on in the space. The way to access that is news and news and analysis will get you to a lot of the most popular journalism, data-driven journalism that our teams have been publishing. And we've had a lot of really good recent research features. I'll just kind of point you in the direction of a couple of them, and these are also in the Resources section. We had won a couple of days ago about wholesale borrowing and some trends with that. So these reports have some charts prebuilt into them, looking at some macro trends, for example, funding trends for broker deposits and other funding sources, like FHLB advances as well and how those are kind of trending on a macro level. And then for individual banks, we also extract some tables to look at quarter-over-quarter changes for some of these metrics as well. Another really helpful feature for these, I think these are really good idea generators and a really good way to kind of learn more about what's in the platform. For example, you can create e-mail alerts. If you like features like this, we can just send them straight to your inbox. And then we also have some Excel templates and models that are directly linked in here as well that might be useful for further analysis. The other feature that I wanted to highlight, actually, if you just go to our home page and just click on our logo here, just came out 20 hours ago, good timing. Our quarterly chart look for U.S. commercial real estate for Q2. Right now on the home page, once this kind of scrolls off after -- it will live in our research drop-down section, market intelligence research library. These are the most in-depth like white paper type analysis reports that our teams published that our research teams publish and here's a link to that feature. But definitely, if you're monitoring kind of what's going on right now with commercial real estate. It's a really good starting point. And this really highlights a lot of unique data and content that our teams have available on this platform. One of the other plugs and [indiscernible] plugged some of the webinars that we have. We have a really good upcoming webinar for CRE in a few weeks that you can register for. Nathan Stovall, is our kind of Senior Director for FIG Research and team is very similar on the insurance side. So a lot of really good thought leadership within there on that program. Just wanted to plug that real quick. And then again, some other kind of recommended reports available within here. One of the things that's available, I [ just think ] you have to show you examples of the data. But one of the things I like about this research report as it kind of looks at commercial real estate from a couple of different angles, not just the banking angle, which we do have kind of top banks by commercial real estate, but also life insurance and some of the statutory NAIC data that we have, looking at life insurance companies that might have some exposure to the commercial real estate. And then also REITs, we cover a lot of industry-specific data for REITs. Some of their exposure to particular office markets, things like that. We also have a commercial properties tool that can even get down to loan levels for different commercial real estate loans or companies that might have office exposure in specific metro areas, things like that. So really just scratching the surface here. Hopefully, that gives you a little bit of a feel for some of the data and some of the reports that we have. And we also had another recent data dispatch report about commercial real estate net charge-offs here on the banking side, that's really good as well. So a lot to dig into there, but I hope that was helpful and answered your question there, Khevna.

It was super helpful and so insightful. Thanks for that, Jud. I guess my second question to you is how would one go about tracking bank deposits and loan pricing in this volatile environment?

Yes, definitely. It's been a lot of rate increases recently, and we've had a lot of clients interested in monitoring that activity. So in addition to a lot of the financial statement data that we have through the bank call reports. We also track banks, pricing for [ CDS ], other interest-bearing deposit accounts and loan accounts as well. And one quick way to ask. I just pulled out Capital One here as an example. But if you go into the depository rate section. There are a few different links here on the company page that I think are useful. The one that I usually start with is the money rates section, and I had it kind of pretty queued up here. Sometimes it can take a second to load because we actually collect this data at the branch level and aggregate it up. But what the money rates section does, and you can filter up here at the top, if there are different markets that you're looking at are different products. But this really enables you to kind of look at those pricing trends with the different products and even in different markets and how they've changed over the last year. So how banks been responding to some of those rate increases. And then if you scroll down here to the bottom, you'll also have rates, for example, like the federal funds rate or different treasury rates, so you can kind of look at, again, at a macro level how the pricing has changed relative to some of those interest rates. A few other sections in here that I find helpful are the rate specials and the deposit ranking report. So -- I apologize there. It's just loading up here again for a second. But basically, the rate specials would track just like it sounds, any specific rate special. So if there's any kind of one-off specials that the bank is offering to try to gather more deposits, things like that, you'll have information on that within here and some of their competitors as well. So you'll have the rates and then any notes for those rate specials. So as banks are kind of scrambling to get more and more deposits, that's a useful page. And then the deposit ranking report here as well for the different products, again, you can kind of see how their current rates are comparing to different peers. The last thing that I wanted to mention was we also have a really good model for this. I mentioned a few of the models that are linked in some of the research that I showed earlier, but we do -- if you're not aware, we have an Excel template library, which is refreshable. Excel models that are available. Just to be clear here, in order to leverage our templates, you would have to download our Excel plug-in, if you haven't already. So you can do that, again, depending on your profile, but mine is under apps here, Capital IQ Pro office download and you can install that model. But there's hundreds of models available within here, but I'll just quickly show one that I really like is this deposit and loan beta analysis. So on the instructions tab here, I could just zoom in for a second. Just a definition of what we mean by deposit and loan beta, just the percentage change in the federal funds rate or the money rates passed along to customers over a specific time range. So you can select a base company, a list of peers in aggregate in a time series. And then within here, kind of look at it on a side-by-side basis of what those deposit and loan betas are for those different companies and how they compare. And then you also have deposit and loan growth rates alongside this as well so you can kind of look at that in tandem. The other tab, I just wanted to point out within here that I also like is its depository REIT tab. And again, what you can do within here is select a specific product, a specific time series. And then you have the base company versus a list of peers and over that time horizon, kind of see how their pricing has changed for that as well. So hopefully, that was helpful and answered your question there. And with that, I'll just pause my screen share.

Awesome. That does make a lot of sense. Thanks, Jud. I want to come to you, Waqar, now. And I know that we have expanded our private company coverage on the Capital IQ Pro platform, which is so exciting. Could you show us how would one screen for and analyze for the private company's data?

Again, great question. I get it on a daily basis, speaking with clients. And I would add one more question to it, which is what NLP or AI-powered capabilities we have to analyze not just private company data, but generally the data available on the platform. And the answer to the question is very exciting. And the solution is one of the most popular ones as well today. So we cover millions -- tens of millions of private companies globally, and most of them operate in niche sectors, which aren't fully described by GICS classification. So to tackle this challenge, we created an in-house AI-powered algorithm for niche industry classification, which looks for certain keywords in business description or any other textual data and tax the company accordingly. Now to demonstrate this, I've opened a company over here, which is a private company. And if you look at their business description, you would see certain keywords which some of them refer T cells for treatment of solid tumors, T cell therapy and things like this. If you see GICS classification is biotechnology, very broad. So what this algo does is based on this actual data and the keywords within. We tag them with chronic diseases and oncology, which we call them topic tag, but these are essentially the niche markets. What we do with these topic tags is we pull them onto Market maps page. If you're trying to follow it, it will be located under markets and deals under market analysis, where you can see total companies with attached to that specific niche industry, our topic or total funding? And how many companies got funded? Coming back to my previous example. These are hyperlinks. So if I click on one of these, it would take me to the detailed page of that topic tag or that niche industry. On this page, on top, you would see the list of all the tags. So you can type in, this is type of head surge. So if you're looking for certain keywords on niche market, you can type in and it will pull that up. We also have geography filters over here. We give you a brief definition, a brief description of what this niche industry or market is. You have some key stats on top. And the first view for us is the deals tab, where we have prefilled our M&A round of funding for last one year. We give you a good visual which is very robust to understand the trends and then list out all the individual deals which have happened in this niche sector in the last 1 year, where you can see information about target or the buyers, the transaction type and so on and so forth. Now that we have understood how active this space, this niche market is. We can jump into the private companies to see what private companies we have tagged to this topic tag. Here, you can see the information about company. You can see the name. You can see the region. You would also see they're sorted by total assets, but you would have information about rounds of funding last round, date, type and size. So a lot of useful information on one page. And if you keep scrolling down, you would see events and key developments, news and transcripts tabs over here as well. Now you can also jump into the public companies as well over here, I must say. So the way I explain is that if you take a step back, and if you were to analyze the market, understand a niche sector, you would first have to do a keyword search yourself, perhaps to do business subscription, which we do allow through our screener tool or build an algorithm or a model at sure and to first classify these companies, then pull deals for them and then put all these stats together. So this algorithm, the market maps that we have developed is saving our clients a lot of time where you can quickly analyze deals, the private companies within and not just helps you analyze but also help you build comps as well over here. Last thing I would say about this is that we get incredible feedback. And not just that, we get request to create new tags as well. So if you are in this workflow, if you're looking at a market and trying to understand it and we don't find it, please reach out to us. We would love to take a look and create this for you as we go. So that's my brief bit about NLP and the AI-powered model to analyze private companies. Khevna.

Well, that I bet this demonstration would be quite helpful for our audience today. On that note, I was wondering if you could also help us understand deal trends to cover some insights.

So for deal trends, as you know, we have comprehensive transaction data, the deals data. And for that, I think Jud was mentioning coming to the news section with you have topics such as M&A, capital markets, you can come to news and feature data dispatches, where our analysts, our colleagues put together different trends and write summary or give you synopsis of that. I've actually opened up a couple of reports over here. The first one that our team put together was about Global Equity Capital Markets and IPO for the first half and don't have to jump into detail. I believe we shared the links in the section. If not, you can always do the keyword search in the platform, and you should be able to see this. But first, we are looking at the equity capital markets and IPOs. So you can see the offerings generally has declined year-over-year, whereas the number has -- is going up. For the U.S. region, I believe, it's -- there's about a 50% -- over 50% increase year-over-year. But generally, the trend is going down. So you can utilize one of these reports. Secondly, there is another report that I wanted to highlight, which again, our colleague put together was around the [ PE and the VCD ] landscape for the first half of 2023. And just by looking at the chart, you can see that there is a steep decline from peak 2021, and it's going down almost hitting the bottom. It seems like it will keep going down given the quantitative tightening by Fed and other macroeconomic reasons. If I go to Slide #2, you would see over here that generally, there is a decline in all the sector. IT has been getting the most funding so far. On Slide #3, you would see the deal exits by region, again, declined by half, specifically in North America by both numbers and the dollar amount. On Slide #4, you would see the funding. So global funding has also been on a decline. And if you come to our platform, you would also see the dry powder trends as well, which is also -- which is actually increasing. So it tells us that given the market condition, people are sitting on a lot of cash pile bid waiting for things to get better. The last piece on this report is about the emerging sectors, and this also relates to what I was demoing earlier. That is the topic tags. So this is powered by that algorithm. The topic tag functionality where we try to put together a report to show which sector has been getting the most funding. So it's consistently AI and machine learning are the winners among all regions over here. But the report can give you other insights as to what are the other either lagging sectors or other sectors that are getting most funding. So this is a report, but you also have access to the underlying data through the platform. So if we jump into the platform, if you go to markets and deals. And by the way, I want to clarify if you see any difference in your menu items and mine, it's because I have investment banking cross-sector selected as my user profile. So we have created this page called transaction statistics where we have tabs and you can look at the trends real quick for the given transaction. You can also use topic tag functionality in here, among other filters and thus get the list of all the transactions that you might be interested in. Secondly, we also have screener tools. So if you were to pull all the transactions in a given region, in a given sector, you can come to screener, go to transactions and start creating the screens. Another example of how powerful the topic tags in our niche industry classification is that generally, I would pull it given -- using the GICS classification. But in here, I'm not sure if the screen size is big enough for you to see. But I'm using topic tags over here to zero in on the transaction that I want for the last 3 years where the PE is involved and then pull out the list for me where I have the ability to add more data points for transaction comps or general transaction analysis. So I hope this covers we have a lot to show, but I believe we are short on time over here. So I'm going to pass it back on to Khevna if there are any questions from the audience.

Thanks, Waqar. That was excellent. Moving on like you said Waqar, I know that we could possibly talk on this topic for hours at end. But we do have some questions that we've received from our audience today. And before I jump into that, I do want to remind everyone to use the Q&A widget even if we might not be able to get back to all your questions today, we will follow up with you post this presentation. Okay. So the first question is, you guys have merged with IHS, not long back. What sort of datasets have been incorporated from them with the CIQ Pro platform?

Yes, sure. I can take a quick stab at that, and Waqar feel free to add anything as well. So one of the things that I wanted to highlight was some of the macro data that we have for the countries, so you can type in a specific country within here. And from a macro perspective, we've added this PMI data, purchasing managers index trends for specific markets and there's links in here for some of the definitions and things like that. And then we've also added these country risk scores, again, at the macro level, which are updated pretty frequently as well with definitions and risk scores. So that data is really helpful, and it also kind of fits in with some of the data that we've had in the past on the banking industry aggregates at the country level that we have, list of covered companies with credit ratings and CDS information, things like that. So this data has been pretty popular over the last few months with a lot of our clients.

100 percent agree with that. And one more thing and a very brief bit over here. I know we're on time. There is another key piece of data that we added as part of our acquisition with IHS Markit. They had a division that will cover loan facilities and syndicated loans. So with this partnership, and Jud, if you can quickly pull that out, we have added over 100,000 known facilities with this partnership. So this supplements our debt capital structure, anyone looking at a company data trying to do a bottoms-up analysis would look into their debt structure as well. This supplements that data. Secondly, around 3,000 or more of these loan facilities or syndicated loans have pricing as well. So this is contributor pricing as well as evaluated pricing, Anyone who's trading these debt instruments or just trying to understand the market, it will be very, very helpful for you. This is an amazing piece of dataset that we have added, and we're very excited about showing this as well.

Perfect. Thanks, Waqar. In the interest of time, I do want to mention that when you do click out of this webinar, you will be redirected to a survey. If you could please fill it up, we'd love to hear your feedback. And also for anyone who wants to review anything that we've covered today, this session has been recorded and you will receive a replay link tomorrow to access it on demand at your convenience. I believe now all that's left to say is, once again, a big thank you to Jud and Waqar for taking us through this presentation. And thank you all for taking the time to attend this session today. We look forward to you joining us again soon. Thanks, everyone.