Good day and welcome ladies and gentlemen to the Moody's Corporation second quarter 2009 earnings conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company we will open the conference up for questions and answers following the presentation. I will now turn the conference over to Liz Zale, Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone and thanks for joining us on this teleconference to discuss Moody's results for the second quarter 2009. I'm Liz Zale, Vice President of Investor Relations. Moody's released its results for the second quarter of 2009 this morning. The earnings press release and a presentation to accompany this teleconference are both available on our Web site, at ir.moodys.com. Ray McDaniel, Chairman and Chief Executive Officer of Moody's Corporation will lead this morning's conference call. Also making prepared remarks on the call this morning is Linda Huber, Chief Financial Officer of Moody's Corporation. Before we begin I call your attention to the Safe Harbor language which can be found towards the end of our earnings release. Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the act I also direct your attention to the management's discussion and analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31st, 2008 and other SEC filings made by the Company which are available on our Web site and on the Securities and Exchange Commission's Web site. These together with the Safe Harbor statements set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements. I should point out that members of the media may be on the call this morning in a listen-only mode. I will now turn the call over to Ray McDaniel.

Thanks, Liz, and thank you to everyone for joining today's call. I will begin our remarks this morning by briefly summarizing Moody's second quarter and year-to-date 2009 results and update our guidance for the year. Linda will follow with additional revenue detail and operating highlights, I will then speak to recent developments in the legislative and regulatory area and finish with additional details on Moody's outlook for 2009. After our prepared remarks we will be happy to respond to your questions. Moody's results for the second quarter reflected some improvement in credit market activity, particularly the broadening of strong corporate bond issuance from investment grade into high yield. Total revenue was $451 million, down 8% year-over-year. Excluding the unfavorable impact to foreign currency translation total revenue was down 4%. Operating income for the second quarter was $187 million, a decrease of 20% year-over-year, resulting from lower revenue and increased expenses that Linda will discuss later in the call. There was negligible impact to operating income from foreign currency translation. Diluted earnings per share for the quarter were $0.46, 15% below the $0.54 of the prior year period. This included a benefit of $0.03 associated with the favorable settlement of a legacy tax matter and previously announced restructuring activities. Excluding these items from both periods diluted EPS for the quarter declined by 16% year-over-year to $0.43. Turning now to year-to-date performance revenue for the first six months of 2009 was $860 million, a 6% decrease from the first half of 2008. Operating income of $336 million was 22% lower than the same period a year ago. Diluted earnings per share of $0.84 in the first half of 2009 included a charge of $0.01 per share related to the previously announced restructuring activities and benefits associated with the resolution of certain legacy tax matters. Excluding these items in both periods diluted earnings per share of $0.85 decreased 14% from $0.99 for the first half of 2008. We are raising our full year 2009 EPS guidance to $1.45 to $1.55 from the prior range of $1.40 to $1.50, based on our first half performance. However, we remain cautious about business conditions for the remainder of the year. I will now turn the call over to Linda for further commentary on our results and other updates.

Thanks, Ray. I will begin with revenue at the corporate level. For the quarter total revenue for Moody's Corporation was down 8% year-over-year. Excluding the unfavorable impact of foreign currency translation revenue declined 4%. U.S. revenues declined 10% to $137 million, while revenue outside the U.S. decreased by 5% to $214 million, and represented 47% of Moody's total revenue. Recurring revenue of $278 million represented 62% of total revenue compared to 57% in the prior year period. Looking now at each of our businesses, Moody's investor service revenue for the quarter was $310 million, a decrease of 13%, year-over-year, both in the U.S. and outside the U.S. Excluding the unfavorable impact of foreign currency translation MIS revenue decreased 9%. Non U.S. revenue represented 44% of total ratings revenue. Global structured finance revenue for the second quarter was $75 million, 35% below the prior year period. In the U.S. revenue decreased 33% year-over-year due to limited new issuance. The Federal Reserve TALF program supported some of the new issuance in structured finance markets particularly in the asset-backed securities sector, where 25 TALF eligible deals were launched in the second quarter. Outside the U.S., structured finance revenue was down 38%, driven by declines across all asset classes. Global corporate finance revenue in the second quarter increased 9% from year ago to $108 million, primarily driven by better activity in the high yield market and strong issuance of investment grade bonds. Revenue grew 15% in the U.S. and remained about flat outside the U.S., as the rebound in investment grade issuance in Europe was offset by declines in other regions. Global financial institutions revenue of $67 million was down 10% from the second quarter of 2008. U.S. financial institutions revenue decreased 17% due to issuance declines in the insurance and banking sectors. Outside…

Thanks, Linda. I will start with a brief update on legislative and regulatory developments. We continue to communicate with oversight authorities at national, regional and global levels. Beginning in the U.S., there have been a number of developments since our last call. Over the past month the Obama administration has published a blueprint for regulatory reform and provided congress with a set of draft bills on financial system regulation. As part of the administration's legislative proposals draft bills specific to credit rating agencies was published on July 21st. The bill addresses topics such as ways to strengthen the management and disclosure of conflicts of interests, improvements in transparency in disclosure, a differentiated scale for structured finance ratings, disclosure of preliminary ratings, reducing the use of ratings and regulation, and strengthening the authority and supervisory role of Securities and Exchange Commission. The bill is now subject to congressional input as they address the broader elements of financial regulatory reform. Certain aspects of the administration's bill and rating agencies have also been the subject of existing and proposed rules by the SEC. Chairman; Mary Shapiro declared her support for the administration's bill in a House Financial Services Committee hearing on July 22. It is also stated that the commission staff is exploring the possibility of proposing additional rules regarding credit rating agencies. We remain focused on playing constructive role in the discussions of these issues with Congress and regulatory authorities in the coming months. In Europe following the European parliamentary vote in favor of new rating agency regulation, we continue to consult with national authorities, the Committee of European Securities Regulators or CESR, and other authorities such as the International Organization of Securities Commissioners or IOSCO, on the specifics of implementations. The EU regulation is expected to be fully implemented by the…

Thank you. (Operator instructions) We'll go first to Peter Appert at Piper Jaffray.

Thanks. Ray, just more on the guidance, the numbers you're offering seems surprisingly cautious in the context of the margin leverage you're enjoying currently and the momentum we've seen in the market in the first half. Are you seeing something in July specifically or something in terms of pipeline that causes you to be cautious?

I think probably the most important determinant for our outlook in the second half compared to the first half has to do with corporate finance activity. And the reason for our caution and I hope it proves to be cautious, is that we think that a lot of the first half activity was not only refinancing of debt that was delayed from the fourth quarter of last year or needed to be refinanced in the first half of this year, but also prefinancing, that was pulling forward debt that had not matured when windows of opportunity were available. So unless we see additional prefinancing activity from debt that would be maturing in 2010 or 2011, or new money issuance for capital expenditure and investment, I think that we are being cautious because of the amount of refinancing that we believe was pulled into the first half in investment grade in the second quarter particularly in the high yield sector.

So you're not buying the thesis that structural changes in the banking industry are driving issuers to the debt market as opposed to the banking market?

I certainly think that is part of the story and there are certainly arguments and I think they are rational arguments that can be made for upside to our outlook, but I also think there are very good reasons to be cautious. And we have seen activity this year go through periods of sluggishness, and then very aggressive issuance. I expect we are going to continue to see that in the second half as well, as I said hopefully this proves to be cautious but that's the reason for our uncertainty.

Okay. And then Linda, is there anything on the cost side from a phasing or timing perspective that would have implications for margins that might also be a function of these more cautious expectations for the second half?

Yes. Sure, Peter. Couple of points to keep in mind. We have a modest increase in our second half expenses over the first half and we've said that consistently. We do have some seasonal effects in the second half we tend to have a little bit more marketing spend, conference related travel, in the second half we have slight merit-based increases which take effect, we are also watching FX very cautiously. The dollar obviously has been bouncing around and that's making that pretty difficult to predict, but we're remaining cautious and that could move against us. And we do have a bit of ramp up of IT spend in the back half of the year, some of that's compliance driven, some of it is in line with our major technology projects that we're working on. But just modestly higher spend in the second half of the year all of which is predicted and baked in.

And then last thing and I will get off. Ray, you mentioned a sense that the SEC is working on additional rules. Any further color on that in terms of what direction they might be going in?

The proposed rules that they have out in the market now are associated with additional information disclosure, particularly performance disclosure, rating history disclosure. And I think that we would expect to see if anything more attention to the comparative performance between rating agencies, and to information disclosure more broadly for the asset-backed securities market, and that might not relate directly to rating agencies, but would certainly be a part of the market where we are an information user and I would expect that would be on the horizon.

Nothing specific in terms of them addressing the issue of legal liability or pricing model though?

To the extent that Chairman Shapiro expressed support for the draft bill presented by the Obama administration, that bill, I think are probably aware did not call for changes in liability or in business model and pricing.

Great. Thanks, Ray. Thanks, Linda.

Thank you.

We will go next to Craig Huber at Barclays Capital. Craig Huber – Barclays Capital: Yes, good morning. Few questions if I could. Can you break down like I always ask, your non-transaction versus transaction revenue breakdown across your four categories in the quarter?

Sure, Craig. It's Linda. I will give you second quarter of '09, and if you are looking at the sequential change from the first quarter of '09, I think the headline would have to be that our transaction revenue percentage here has actually picked up. In the first quarter of 2009 we were at 46% transaction revenue for the rating agency. And then for the second quarter of 2009 that moved up to 52% and 48% recurring. So let me give you each of the segments and I will do transaction first and relationship second. So for structured, transaction is 41%, recurring or relationship is 59%. For CFG corporate finance, it's 67% transaction as we saw an increase in investment grade and high yield issuance and 33% relationship. Financial institutions is 33% transaction and 67% relationship. And public project and infrastructure is 59% transaction and 41% relationship, which for the rating agency is I said, 52% transaction, and 48% relationship, which is a move towards the transaction side. Analytics remains pretty constant at 9% transaction and 91% relationship. So for the corporation as a whole, we are at 38% transaction, and 62% relationship, bit of a move towards the transaction side with a good second quarter. Craig Huber – Barclays Capital: Great. And then separately can you speak if you would about your interest expense line/other collectively, it came in at $8 million higher than I was expecting once you adjust for the $6.5 million one-time item. Can you just explain why that was up significantly from the fourth quarter to the first?

Sure. As we said in the script, Craig, we had a resolution of a tax matter. And probably best that we look at this once the Q is out in a little bit more detail. But the net effect of that resolution not a lot of money and it's not material but it does provide for movement both in our tax liability line and our related interest line. So the difference there, the main part of the difference there is really accounted for by that resolution of a tax matter. Craig Huber – Barclays Capital: What was the foreign currency translation in you balance sheet items, did that impact the quarter, tends to bounce around?

It did. And if you look at the other part of the line looking sequentially the first quarter of 2009, we had a reduction in that line of $4.7 million from FX or FX loss if you want to call it that of $4.7 million. And that number widened out to a loss of $6.4 million in the second quarter. So yes, you are correct. Craig Huber – Barclays Capital: Okay. On the cost, if you could, can you break out for us how much collectively your incentive and stock-based accruals were in the second quarter? What was the same number in the first quarter?

Yes. Just a second here while we find that for you. Incentive compensation in the first quarter of 2009 was 6% of total compensation. And that numbers moved up to 8% for the second quarter of 2009, and Craig that reflects that the accrued compensation as we go based on performance. And as you can see we had a good pick up in the operating income line and some of our other lines in the second quarter. So we increased the percentage there for incentive compensation, and the difference comes to about $5.1 million of increase for the second quarter over the first. And we will see how that accrual rate goes for the back half of the year. We'd also like to flag for all the analysts on the call. This year we are paying out bonuses or we would expect to pay out bonuses is something that's approximates 50% of our normal sort of targets. As performance of the company improves and particularly as we're planning for 2010, we would expect that that bonus number is going to have to pick up in the range of $40 million to $45 million. So we just want to make sure that everyone in modeling 2010 is taking that number into account and thinking about that roll forward for next year, if we are fortunate enough to deliver good results to the shareholders and to be able to do better for our employees.

Yes, just to underscore Linda's comment, this is on a target to target basis, there would be a $40 million to $45 million increase looking at 2010. Craig Huber – Barclays Capital: Okay. And then can you also, like Peter was asking, about your guidance, it certainly seems conservative, I mean given you earned what $0.40, clean number in the fourth quarter when the world seem almost stop, $0.41 in the first quarter. Can you talk about the bullish case of why that wouldn't actually be exceeded in the second half of the year? About the negative side, but the positive case here.

Sure. I guess the positive case is fairly easy to make by just describing the absence of negative cases. So far this year, we have only really seen strength in issuance activity coming out of the corporate finance sector and some parts of infrastructure finance. So the drivers of growth have been limited even though especially in corporate it has been powerful. If we were to widen out issuance activity and see stronger issuance coming out of the financial institution sector, the structured finance sector and public finance that would be certainly a boost to revenue, and we are looking more to the Moody's investor service side of the business rather than Moody's analytics where I think the possibility for significant surprises is less. Our current outlook does not assume any significant pick up in activity in any of those lines. And as I was describing to Peter is assuming that first half issuance activity in corporate finance is going to be larger than second half issuance activity because of the refinancing and prefinancing combination that we believe was pulled into the first half. So it would be on the rating agency side and it would be an uptick in activity across anyone of a number of lines which have been soft in the first half of this year.

Craig, its Linda, if you wanted to usually you ask me a bit more detail on the corporate finance line, let me further pick up on what Ray was saying. If you look at it sequentially from the first quarter of 2009, we did $84 million on the corporate finance line and as we said in the second quarter we've done $107.5 million in fact. Of that the percentages investment grade is 30% of that, but high yield is 24% of that, up from 7% in the first quarter. Bank loans 6% and other is 40%. So we would love to see the high yield pace continue, but high yield as you know tends to be quite choppy and very much affected by market conditions. So if things break our way and we do continue to see increased high yield issuance that would be helpful, but again we would rather not count on those sorts of things. Craig Huber – Barclays Capital: But is it reasonable to expect corporate finance to be comparable to the first quarter as opposed to the very strong second quarter, each of those two quarters?

Well the investment grade corporate finance was very strong in the first quarter. And remember that in investment grade we have more frequent issue of pricing agreements, and there is going to be more capping of fees over the course of the year. So frankly we would benefit more by continued strength in high yield activity rather than investment grade activity. And even in high yield just to offer a little bit of caution, there is some cannibalization in high yield from the rated bank loan market into the high yield bond market. Still it's very much a positive if we continue to see issuance in the third quarter and fourth quarter in high yield like we saw in the second quarter. Craig Huber – Barclays Capital: Okay. Thank you.

We will go next to Michael Meltz with J.P. Morgan.

Thanks. I think I have three questions for you. Ray, you spoke a lot about corporate and financial institutions, I actually think implicit in your guidance structures is the one category you expect to pick up as the year goes by. Can you talk about what you are seeing on an absolute revenue basis, what you are seeing there? And I think back in at the investor day, Andy had made some comments about market share, are you feeling better about market share? And then I have two follow-ups.

Okay. With structured finance, we really don't anticipate any material pickup. We may see a little bit as there is both use of the TALF program and potentially some additional issuance in the asset-backed sector on a non-TALF basis. But the bottom line is we do not expect any significant ramp up in activity in structured finance. We do have pretty good visibility into structured finance as far as the monitoring and surveillance fees are concerned. So an uptick in transaction activity there would be beneficial to us and would contribute to a favorable surprise. With respect to market share, market share in some areas is down and that is related to the use of government programs, one, which don't distinguish between rating agencies the way private sector investors might. And secondly, institutions doing balance sheet transactions where they are not trying to sell those transactions out to an investor base and so they are perhaps less concerned with whether they are holding a Moody's rating or a rating simply from another firm that can offer the rating level they are seeking. So for this period when we have a somewhat if not artificial unusual investor story for structured finance, I think we are going to continue to see some market share challenges.

Okay.

Sorry, Mike, I was going to follow up with the breakouts if you wanted them by categories, would that be helpful to you?

I don't really care. Someone else might. I didn't mean that negatively. I can get it offline. My question for you, your point about bonuses or incentives, for incentives to double what type of revenue growth target would that imply?

I think we would like to see the company get back to the type of revenue growth that we had seen in previous years, but I will let Ray comment.

Michael, we have to distinguish between what would cause a bonus or an incentive payout that would be twice target versus our return to target in the bonus plan and the accruals that we make. We discounted our target bonuses this year. And in a recovering market in 2010 and beyond we would intend to return to our full bonus target.

I don't know what that means, Ray. I think you used to say in a normal year you'd be accruing at 15%.

Yes. That's approximately right. And right now we are at 8%.

Okay. Linda, the non-operating line, I don't think anyone really understands that. Can you just give us as you sit here today in the back half of the year what's a good run rate of expected interest and non-operating expense, please?

Sure. Michael, that's the hardest line to project forward because we've got obviously a lot of ins and outs there, and FX piece bounces around. We have the expense on borrowing line would probably be one of the more consistent ones and that runs slightly over $10 million, closer to $13 million per quarter. So you can pretty much look at that one unless we make some big change in our capital structure which we don't anticipate, that one is pretty -- you're able to count on that one. Legacy tax and FIN 48 as you know we are working on resolving some of our tax matters that we had a little bit of movement in those between the first quarter and second quarter. I think the best way to describe this is that the total of that line was hit by $2.8 million between the first quarter and second quarter. And then going on we do have other pieces on this, for the second quarter, FX was $6.4 million loss, generally, as the dollar strengthens that will move against us, so you got to gauge that accordingly to what's happening. We have income from joint ventures which is a little over $1 million, and sometimes we have some other costs. So the $12.6 million that we're looking at for the second quarter, is up from the $7.3 million is an increase in expense over the $7.3 million from the first quarter, so you can take a range somewhere in there. But again that's going to be very difficult to pinpoint exactly.

Okay. My last question for you, I promise. Yesterday I think McGraw had mentioned their legal situation, they said they have over 30 lawsuits outstanding. Can you give us an update, Ray, however you want to address it, where do you stand on some of the legal issues, please?

Well the details on what we think are relevant litigation will be included in our 10-Q. I don't think you will see dramatic changes from what we have described previously. But, yeah, we do have litigation, some of it is has been publicized more than the others of it. And I would be surprised if ratings related litigation between ourselves and our competitors looks dramatically different. So that's as much as I can give you for now until the Q comes out.

Thanks for your time.

We'll go next to John Neff at William Blair.

Hi, thanks. Linda, a question for you. We get to see a meaningful uptick in your D&A expense, can you give us an update on where you stand with Canary Wharf and CapEx year-to-date versus your full year expectation?

Sure. Let me see if I can find this. Canary Wharf is approaching its end. And through the end of the year we will continue to run a double rent expense, John, which runs about $2 million per quarter, it's about $0.75 million per month, and so that runs off at the end of the year. We're getting ready to start to move about 800 people over to the new location, we're starting those moves after Labor Day, we're going through mid-October. And the team will be occupying five floors over at Canary Wharf on the terms of a very good deal that we were able to negotiate with them. So we have said that the cost for that was about $40 million to $50 million in total. And we are looking at a more normalized CapEx run rate of $60 million to $70 million going forward. We're trending upward because we are building out some system improvements that we've talked about. Some of those are just good business sense to do them. Others have some interaction with our compliance activities, so as we build out the systems we capitalize those obviously and the D&A number will move up a bit. But the bulk of it for this year, you're correct, it's been Canary Wharf, and we are almost ready to move.

Okay. We are seeing that expense in the D&A associated with Canary Wharf at this point, so there is no reason to suspect there is going to be a step function up.

I think that you may see a bit as we bring all of it online. But stay tuned as we get to our Q and we will talk to you some more about that, John, if that's okay.

Okay. Ray you had mentioned market share and I was going to ask you specifically about RMBS, where looks like there has been some dramatic changes there, granted on very low transaction volume, but DBRS and Fitch seemingly large increases there. I was just wondering if you could speak to the dynamics you are seeing in that market in particular.

Well, I guess the first comment would be we are not seeing much of a market there. And so I'm not terribly concerned about the transaction or couple of transactions that have come to market. But we have changed our methodologies and our approaches to rating RMBS. I think we are well positioned with that when the market returns to a state of better health in terms of being able to persuade investors that our analysis is rigorous, robust. And so we are going to wait. And when that happens I think we are going to be able to make the case very effectively that the ratings we provide on those securities are going to be the best ratings available. So stay tuned.

Great. Another one kind of related to the asset-backed market, but two recent CNBS deals in the UK, curious were those rated by Moody's and how hopeful a sign is that for the CNBS market?

To tell you the truth I don't know if they were rated by Moody's. I don't know if Michel Madelain who is on the phone is aware.

I think we rated one of them.

We rated one of the two.

I mean the way we look at those deals out there, they were very sort of a simple structure, single asset or single obligo [ph] and we see that as the way CNBS would return at least in Europe in four months we expect to see.

Again I don't think we are not anticipating any real strength in CNBS issuance activity in the second half of the year.

And then could you just remind us as far as incentive comps and bonuses are concerned, what are the key financial metrics that those bonuses are tied to?

Well, for management the bonuses are tied to the operating income of Moody's Corporation, that's for the Moody's Corporation management and then operating income for Moody's investor service or Moody's analytics are the financial measures. We also have a number of qualitative measures that help to guide performance path. There is also an EPS measure for a small number of the senior executives of the firm.

Great. And then last question here. Just for the record I guess will Moody's lose any revenue as a result of these prohibitions that are coming out and the regulatory reform against rating agencies advising on or structuring bond? Thank you.

Yes, I looked at that in the draft bill and I guess there are a couple of reasons why I don't think so. But let me start with just the comment that our consulting or professional services line in Moody's analytics I think would be the only thing that is potentially affected. And a good bit of that line is in fact non-consulting activities, having to do with things like credit training that we do out of that line. So it's the smallest line at Moody's analytics and a good portion of that is in fact completely unrelated to consulting. So I'm not too concerned even if the decision is made that we cannot do that, but I don't think that, that is going to be the conclusion, I think there is going to be much of a focus on not conducting consulting activities out of the rating agency and not conducting consulting activities related to ratings out of any part of the firm. And I think we are on very safe ground on both of those points.

Thank you.

We'll go next to Edward Atorino at Benchmark.

Actually my questions were answered I had to do with that other line which I sort of always ask. I let somebody else ask it. Thanks. Bye.

Thank you, Ed.

And we'll go to Craig Huber at Barclays Capital. Craig Huber – Barclays Capital: Yes, Linda, I will take you up on the offer just to hear the breakdown of the structured finance revenues on the quarter.

Okay. Let me find it again. My feelings were a little bit hurt here that Michael rejected the information but we will try to get over that and move on. For second quarter structured remained pretty flat sequentially, Craig, which I know you always like to look at. Total FFG was $74.6 million as compared to $72.4 million in the first quarter. And the percentage breakouts go like this Asset backed for the second quarter was 34% of that total as compared to 31% in the first quarter. So as we've said we've seen a little bit of improvement in the asset backed line and not a lot, but that's the positive there. RNBS is 19% for the second quarter as opposed to 18% in the first quarter. It's basically flat. Commercial real estate is 13% versus 15% in the first quarter. And derivatives is 34% opposed to 36% in the first quarter. And again 74.6 as compared to 72.4. So it's pretty flat. And yes, obviously, it would be very helpful to have some uptick in the structured finance line, but we've planned that we will continue to see very modest revenue from the structured finance line for the rest of the year. Craig Huber – Barclays Capital: Before I ask you about financial institutions, in the past, Ray, you said basically in your structured finance you thought permanently going with somewhere between $200 million and $250 million of your revenues, you said 10% to 12% of ratings revenues in 2007 for the whole company. Can you give us an update on that, that number seems low to me nowadays, $200 million to $250 million. What do you think?

I have not done a formal update of my original analysis, Craig. But I would agree with you, I think that is light at this point. My range I guess would probably if we go back and look at 2007, total revenue for the firm of $2.26 billion. I'd say probably we're looking at more like 15% to 20%. So maybe a $400 million kind of number for the reduction in structured finance, once it gets back to a recovery condition and looks more normal.

Okay, Linda, can you give us a breakout of financial institutions?

Sure. Yes. Financial institution revenue for the second quarter of 2009 was $67.3 million, sequentially that's up from $56.3 million in the first quarter. As we had talked about we had seen sort of a hesitation or a postponement in seg revenues. So for banking in the second quarter we are looking at 65% of that total line versus 68% in the first quarter, so that's off a bit. Insurance is up a bit, 31% versus 27% in the first quarter. And managed investments is 4% versus 5% in the first quarter. So a little bit of movement there and a little bit of improvement, but again modest. Craig Huber – Barclays Capital: And then while I have you about breaking down the project public line, please?

Okay. Craig Huber – Barclays Capital: I'll let you go.

Okay, Craig. That's up a bit sequentially, we're at $60.8 million versus $57.4 million in the first quarter. And your favorite line here, Craig, PFG sovereign represented 49% of that total in the second quarter versus 52% in the first quarter, that's down a bit. Municipals was 9% in the second quarter versus 11% in the first. So again a little bit of a modest decrease there. Project and infrastructure moved up nicely to 43% from 37% of that revenue line in second quarter over first quarter. Craig Huber – Barclays Capital: Great. Thank you.

Sure.

And we'll go next to Peter Appert at Piper Jaffray.

Ray, on the issue of competitive dynamic, have you seen more push back from clients in the context of either playing the competitors against each other or just more sensitivity to pricing in the context of a difficult macro environment?

I don't think it's so much sensitivity to pricing as it is the operating conditions that have been offered to the market under these government programs, whether it's the TALF program, which requires AAA ratings or whether it's the European Central Bank program, which also requires AAA ratings it simply causes firms to have to look for a AAA and that's frankly understandable because that's how they can have eligible securities. And in addition, once they've made that determination I think naturally they are going to look for the easiest to achieve AAA. Again, I don't think that's surprising.

It's not about pricing it's about who can give me the rating.

It's who can give me the rating and what are my all in costs including the overcollateralization or collateral posting that has to go along with it.

You haven't seen the basis point fees vary dramatically this year versus a year ago?

No. The direct ratings cost are a very small part of these transactions costs, so that's not where the pressure is coming. It's on the ratings themselves and on collateral to support those ratings.

Thanks, Ray.

And that does conclude today's question-and-answer session. At this time I would like to turn the conference back over to Mr. McDaniel for any closing remarks.

Just want to thank everyone for joining us today and say that we look forward to speaking with you again in October. Thank you, everybody.

And that does conclude today's conference. Again, thank you for your participation.