Good day, and welcome, ladies and gentlemen, to the Moody’s Corporation First Quarter 2014 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 question and answers following the presentation. I’ll now like to turn the conference over to Salli Schwartz, Global Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thanks for joining us on this teleconference to discuss Moody’s first quarter results and our outlook for full year 2014. I am Salli Schwartz, Global Head of Investor Relations. Moody’s released its results for the first quarter of 2014 this morning. The earnings press release and a presentation to accompany this teleconference are both available on our website at ir.moodys.com. Ray McDaniel, President and Chief Executive Officer of Moody’s Corporation, will lead this morning’s conference call. Also making prepared remarks on this morning’s call 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 31, 2013 and in other SEC filings made by the company, which are available on our website and on the Securities and Exchange Commission’s website. 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 would also like to point out that members of the media may be on the call this morning in a listen-only mode. I’ll now turn the call over to Ray McDaniel.

Thanks Salli. Good morning, and thank you everyone for joining us on today’s call. I’ll begin by summarizing Moody’s first quarter 2014 results. Linda will follow with additional financial detail and operating highlights. I will then conclude with remarks about our outlook for 2014. And after our prepared remarks, we’ll be happy to respond to your questions. First quarter revenue of $767 million increased 5% from the first quarter of 2013 and reflected continued strength in Moody’s Analytics, as well as modest growth in Moody’s Investor Service, despite variable market conditions and challenging year-on-year comparisons. Operating expenses for the first quarter were $434 million, a 4% decline from the first quarter of 2013. Operating income for the first quarter was $333 million, a 19% increase from period year period. Adjusted operating income, defined as operating income less depreciation and amortization, was $356 million, up 17% from the same period last year. Diluted earnings per share of $1 for the first quarter increased 20% from $0.83 in the first quarter of 2013, and on a non-GAAP basis excluding litigation settlement charge in 2013, increased 3% from $0.97 in the prior year period. We are reaffirming our full year 2014 guidance of high-single-digit percent revenue growth and EPS in the range of $3.90 to $4. I’ll now turn the call over to Linda to provide further commentary on our financial results and other updates.

Thanks Ray. I’ll begin with revenue at the company level. As Ray mentioned, Moody’s total revenue for the quarter increased 5% to $767 million. The impact of foreign currency translation for the quarter was negligible. First quarter U.S. revenue increase 4% to $426 million. Our revenue outside the U.S. grew 6% to $342 million and represented 45% of Moody’s total revenue for the quarter. Recurring revenue grew 12% to $397 million and represented 52% of total revenue, up from 49% in the prior year period. Looking now at each of our businesses, starting with Moody’s Investor Service. Total MIS revenue for the quarter was $526 million, up 1% from the prior-year period. U.S. MIS revenue of $316 million increased 1% from the prior-year period. MIS revenue generated outside the U.S. of $210 million also increased 1% and represented 40% of total ratings revenue. The impact of foreign currency translation on the MIS revenue was negligible. Moving to the lines of business for MIS. First, global corporate finance revenue in the first quarter increased 2% from the year ago period to $264 million, and reflected increased U.S. investment grade bond issuance, as well as higher revenue from rated U.S. and European bank loans. We also saw increased monitoring revenue across all regions as a result of more companies becoming rated to access the global bond markets. These gains were partially offset by a contraction in global speculative bond issuance. In the U.S. year-over-year revenue was up 5% while non-U.S. revenue declined 3%. Second, global structured finance revenue for the first quarter was $95 million, an increase of 2% from the prior-year period. In the U.S., revenue increased 5% year-over-year, primarily due to commercial real estate ratings. International structured finance revenue was down 3% against the prior-year period, with gains in certain…

Thanks, Linda. I’ll conclude this morning’s prepared remarks by discussing our full year guidance for 2014. Moody’s outlook for 2014 is based on assumptions about many macroeconomic and capital market factors, including interest rates, corporate profitability, business investment spending, mergers and acquisition activity, consumer borrowing and securitization, and the amount of debt issued. There is an important degree of uncertainty surrounding these assumptions, and, if actual conditions differ, Moody’s results for the year may differ materially from the current outlook. Our guidance assumes foreign currency translation at end-of-quarter exchange rates. As I mentioned earlier, our full year 2014 EPS guidance range remains $3.90 to $4. For Moody’s overall, the company still expects full year 2014 revenue to grow in the high-single-digit percent range. Full year 2014 operating expenses are still projected to increase in the mid-single-digit percentage range. Full year 2014 operating margin is still projected to be 42% to 43% and adjusted operating margin for the year is still expected to be 45% to 46%. The effective tax rate is still expected to be approximately 33%. Full year 2014 total share repurchases are still expected to be approximately $1 billion, subject to available cash, market conditions and other ongoing capital allocation decisions. Capital expenditures are still projected to be approximately $90 million. The company still expects approximately $100 million in depreciation and amortization expense. Growth in compliance and regulatory expense in 2014 is still projected to be less than $5 million. Free cash flow is still expected to be approximately $900 million. We’ve modified certain components of 2014 guidance to reflect the company’s current view of business conditions. For the global MIS business, revenue for the full year 2014 is still expected to increase in the mid-single-digit percent range. Within the U.S., MIS revenue is still expected to increase…

Thank you. (Operator Instructions) We’ll go to Manav Patnaik with Barclays. Manav Patnaik – Barclays: Yes, hi everybody. So the first question on the ratings business. You mentioned on the structured finance side that you some benefit on the commercial real estate side. I thought the CMBS activity was not that great this quarter. So I was just wondering is that an implication that there is some share gains happening, or maybe this is some other dynamic that I am not picking up.

Manav, this is Ray. No, you’re correct. We did have strong coverage in the commercial real estate sector in the first quarter. So that benefited us. Manav Patnaik – Barclays: Okay. And was that specific to, I guess just the U.S. right. What is the sort of your outlook on the Europe in terms of how that performs?

You’re correct. This was a U.S. story in the first quarter. Commercial real estate in Europe and Asia was not strong in first quarter, but the U.S. market is substantial. And so overall contributed to the growth in securitization for Q1. Manav Patnaik – Barclays: Got it. And then just a question for Mark. In terms of the instead of bigger strategic vision for professional services, is Copal and Amba basically, with your testing business or whatever, the complete suite, or is there something else that needs to be added on to this long-term, just trying to understand what the vision is for that particular business?

Manav, I think I’d say that we like what we’re doing in that area. We like the – we added Amba last year to build out the Copal platform. And we like where that business is going. We see a lot more growth opportunity there. In the training and certification business, similarly we like where we’re positioned there. That business has been a little bit soft over the last couple of quarters, and I think that mostly reflects some of the banks having other priorities in other areas that they are funding rather than focusing on training and development of their staff. But I guess the short answer is, we like where we are in professional services, and we particularly like what we’re doing in the outsource research and analytics side of business.

Manav, it’s Linda. Let me probably just point out that we own two-thirds of the Copal Amba Group. So just want to make sure that everybody is aware of that ownership structure. Manav Patnaik – Barclays: Okay, fair enough. And actually, Linda, if I can just squeeze in one. On the expense side, I think last quarter you had talked about it coming in at $450 million and then ramping up another $40 million by the end of the year. It came in a little better this quarter. How should we adjust that for the rest of the year?

Yes, Manav, your observation is exactly correct. We did do better than we expect on the expense side in the first quarter. So we still expect the same end point. So we would ask that you look at a little bit of a steeper ramp. So we’d like you now to look at $50 million to $55 million of ramps specifically from $434 million this quarter to $490 million for the end of the year. Manav Patnaik – Barclays: Okay. Thank you.

And we’ll go next to Andre Benjamin with Goldman Sachs. Andre Benjamin – Goldman Sachs: Hi good morning. I first want to follow-up Manav’s last question. In terms of the costs, the lower than expected this quarter. Can we get a little more color on what exactly drove that? Was it just a timing issue, was it lower comp accrual. Just what makes you believe that you’re still going to spend the same amount of money for the full year?

Sure, Andre. The factors to the positive were lower legal costs and lower incentive compensation. I think we have said previously, you might want to look at $35 million for incentive comps for each quarter. We ran shy of $30 million this quarter, because of the top line was close and EPS was good, but we were little bit lighter on incentive comp. Those two positives were offset by overall higher compensation expenses, because we’ve added more people over the course of the year, and some consulting and IT costs for some of the things that we’re looking to do too, improve efficiency to ramp here. So it didn’t what we see now. We do think we will have that ramp over the course of the year. We are intending to increase headcount to support our revenue growth over the course of the year. And again we can’t predict exactly what’s going to happen with incentive compensation, but probably that $45 million a quarter is as good number you’re presenting. Andre Benjamin – Goldman Sachs: Thanks. And for a follow-up, on the RD&A business. Could you maybe talk a little bit about how much of a growth which has been sustained high-single-digits for the last year or so on a quarterly basis? How much of that’s driven by, say, new product innovation versus growth in demand from some of the existing products and pricing? And are there any things on the horizon that you’re seeing as you talk to customers that would make you lead to believe that you can maybe even see a higher growth rate?

Mark why don’t you address that if you would.

Yes. Andre, I think that what’s been going on in RD&A which we think is been performing quite well for us, is a function of a couple of things. You mentioned pricing, that’s been a nice contributor for us. We’ve done I think some very good work on upgrading the product offering and providing a more complete product delivering, more content through our core research delivery platform, moodys.com. So I think that has driven lots of demand. We’ve seen very good customer retention. Linda mentioned that that was running in the mid-90s. It’s as high as we’ve ever seen it. So that’s helped us very well. So I think just generally the business is doing quite well along all of those dimensions, pricing, coverage and the breadth of the product offering. It’s just performing very well. Honestly the underlying growth in the market is fairly limited. We don’t have a lot of new entrants coming into the market. So it’s not like we’re selling to lots of new customers. But we are finding very good demand with the customers that we’ve got. And we’re finding that they’ve got very good appetite as we’re able to deliver more content through the platform. Andre Benjamin – Goldman Sachs: Thank you.

And we’ll go next to Bill Warmington with Wells Fargo. Bill Warmington – Wells Fargo: Good morning everyone.

Hi Bill. Bill Warmington – Wells Fargo: I wanted to ask if you could give us some color on your bank clients, specifically where they’re spending money, where they’re not spending money, and how that’s impacting your guidance?

In terms of banks purchasing services from Moody’s Analytics or in the ratings side? Bill Warmington – Wells Fargo: The former.

Okay. Sure, I’ll turn this over to Mark in just a moment, but it’s really going to touch on all three areas of the Moody’s Analytics business, and has been a significant driver for the enterprise risk solutions component. But Mark may want to give some more detail on that.

Yes, that’s exactly right Bill. Banks represent a very sizable share of our overall customer base. And we’ve seen very good demand from that customer set, again going to some of the things that I mentioned a moment ago in the RD&A area in response to Andre’s question. But also Ray mentioned the enterprise risk solutions. All of the work that banks are doing to meet regulatory requirements, whether that be Basel III requirements outside the United States or stress testing requirements in the U.S., there has been very, very healthy demand from those customers. We can do in a lot of work. We’ve been getting very good traction in that area, and we continue to be very optimistic about the outlook for demand for our product offering across the product portfolio. Bill Warmington – Wells Fargo: Okay. And I also want to ask for your thoughts on issuance trends as you’re seeing in the U.S. and Europe and Asia?

Sure. I think it was pretty apparent that there was a difference in the first quarter between what was happening in investment grade and speculative grade bond issuance. Lot more strength in the investment grade sector. Speculative grade was soft really globally. So it hit us in the U.S. and Europe in particular, because those are our largest markets for spec rate, but it was also a factor elsewhere around the world. So we were soft on the spec rate. That was offset though by the strength in the bank loan area. And the demand for an increase in ratings in bank loans was very beneficial for us. And I expect we’re going to continue to see that, both in terms of demand for variable rate product like bank loans and the demand for ratings in that sector. I guess the last thing I would add to this is that, we also benefited from growth in monitoring fees. And those monitoring fees are growing along with the new rating mandates. And you’ll recall that in 2013, we had a very healthy growth in new rating mandates globally. A lot of those were spec rate issuers. And so we even though spec rate activity was lower, we were gaining from those new relationships in the monitoring fees rather than the bond issuance fees. Linda, I don’t know if had anything you wanted to add to that but.

Sure, Bill. If you want to look at U.S. trends, thinking first about investment grade, long-dated U.S. corporate bonds were the best returning asset in the first quarter at 7.75% despite some very negative initial outlooks on the investment grades sector at the beginning of the year. Issuance for the year for the first quarter in U.S. has been about $300 billion, which was up 10% year-over-year. We’re still looking at sort of flattish for the whole year. Fund flows have continued to be positive into investment grades. And we would hope to see some shifting of proceeds towards M&A or CapEx. We haven’t fully seen that yet. Year-to-date issuance has been about financials. And the three to five year part of the curve has been the largest share of issuance. Investor demand is also very high there. Shorter duration because the concerns about the rising rate environments. Now if we had to split it into headwinds and tailwinds. Headwinds would be potentially slowing work in China, reduced signals from the Fed, escalation of Ukraine and Russia situation. Tailwinds would be that rates remain new record low, 10-year at 2.64% this morning, good investor demand, and again the asset classes performing well. We’ve had some good strength in Europe as well. The current pipeline is a little bit on the lighter side because of earnings blackout that we’re expecting pickup on that in May. And then the spec grade side as Ray said, we do see an offset of high yield bonds by leveraged loan. Leveraged loan fund inflow continues to be strong and we continue to see that trend for a very long time. The main drivers of the loan market have continued to be refinancing, but last week we saw some pickup on the leverage side in M&A. 79% of loans syndicated last week were earmarked for acquisitions. So that’s an interesting trend. We’ll see if that holds. And we’re seeing M&A activity at about 37% of the calendar going forward, and 59% of the combined and announced calendar. So again let’s see what happens. Yields continue to be helpful. CLO issuance is also healthy. But again that is not such an high yield market for straight bonds. And we continue to see that that is a little bit weaker, $75 billion of issuance versus a $100 billion last year. So I think those are some of the overall trends in what we’re seeing in terms of the strength and weakness in various markets. Any other details you might need? Bill Warmington – Wells Fargo: Very helpful. Thank you.

Sure.

And we’ll go next to Peter Appert with Piper Jaffrey. Peter Appert – Piper Jaffrey: Hi Linda, actually I need one more detail please, and that is the – we saw that mega deal, this week or last week I can’t remember where the international yield markets [ph]. Can you read anything into that in terms of maybe using up the logjam in the high-yield markets?

I think we’re now going to have Michel comment on that. Michel, any thoughts on whether that is a trend starter?

Well, I think it’s been viewed as really something that is a bit of a game changer in terms of the scale and the size of the deal and the opportunity creates for funding of large transactions in Europe and in some other market. So from that perspective, I think that was a very welcome event. And you’ve seen it’s been a very successful deal however described and good condition. So I would clarify that as a positive sign. Peter Appert – Piper Jaffrey: But no indication that the backlog is specifically picking up in the context of their early favorable results.

Well, it is an M&A. This is an M&A driven transaction. So you’ve seen there is a number of – this is obviously something that tends to be variable driven. And to the extent that we see more M&A activities, what they mean is that we’ll see more of those transactions, but again we view that as a positive development for the market. Peter Appert – Piper Jaffrey: Great. Understood.

And Peter I would just add that with the ability of potential M&A transactors to see the degree of market appetite for these larger deals, you have to put that in the positive category. Peter Appert – Piper Jaffrey: Right, absolutely. And then I wanted to, if I could ask Mark a question. Mark, I’ll need a day, things called fairly. You saw year-over-year improvement in the analytics margins in the current quarter and the numbers have been drifting lower over the last couple of years. I’m wondering, Mark, you would call that a trend? Are we plan we were going to start to see some leverage from the investments we made in the last couple of years?

Well, our goal is certainly to move the business to higher margins overtime, and we’re doing an enormous amount of work to get us there. I just caution you a little bit Peter on the timing of that. I think for us to get to the margins that we’re aiming for. We’ve still got a lot of work to do. And we’ve got to build more scale into the business and also we’ve got to make number of our product offerings, particularly in enterprise risk solutions, more scalable and more easily configurable and replicable from customer to customer. So there is a fair amount of work going on there. So again that’s clearly our objective. We’re very focused on that, but I’d be real love them to declare victory on that just on the basis of what you’ve seen in this quarter. Peter Appert – Piper Jaffrey: I actually got – the first quarter was interesting, because it’s with dilution from Amba, correct? What was the impact of Amba on the margins?

Peter, I’m not sure we’re going to break out the impact of Amba on the margin other than we said that the Copal Amba Group has Moody’s like growth rates and Moody’s like margins. So you might want to do a little reverse engineering there, but I’m not sure we’re going to go into that specifically. Peter Appert – Piper Jaffrey: So Amba theoretically was accretive to the margins. So I guess, Mark, the message is that it’s really about the risk software business in terms of where the margin leverage is going to come in?

Absolutely. And again there is a whole program of activity in that line of business to get us there, but that program is a program that’s going to start that meaningful impact on the bottom line over a period of years rather than quarters. Peter Appert – Piper Jaffrey: Okay. And then just quick last thing. Linda, should you assume the share repurchases are relatively even through the year?

Yes, Peter. We do adjust bits of what we’ve seen from market conditions, couple of comments there. We do have heavy issuance of shares in the first quarter that’s when we primarily do the issuance for our previous year compensation plans. So that is particularly heavy in the first quarter. And as we move through the year, we’re pretty well balanced out. I would say that, for the number of trading days we’ve had in the year, we would note that to this point we are on pace to achieve our $1 billion for the year. Peter Appert – Piper Jaffrey: Thank you.

And we’ll go next to Hamzah Mazari with Credit Suisse. Flavio Campos – Credit Suisse: Hi, this is Flavio. I am standing in for Hamzah today. Thank you for taking my question. I just wanted to turn back to costs a little bit very briefly. I was just wondering when thinking about the leverage you can pull to reduce costs. If there is any relationship between MIS and Copal in the sense of using Copal services in order to drive down costs of research? Is that something that you have looked into before?

Flavio, it’s Linda. And Ray or Michel may want to comment on this. We think we’re managing our costs pretty well while making the required investments in the business. As you can see this quarter, we’ve had some particularly strong results from Moody’s Analytics, but we’ve always felt Moody’s Analytics has been a little bit under in terms of its performance. So we are watching our costs pretty carefully, but we do want to make sure we make those strategic investments to keep these businesses growing at the pace that they have been growing. For the Moody’s shared services side, we do use the Copal Amba Group. We have about 100 people that we’re using for shared services. And most of the increases in our headcount for shared services would be offshore at this point. So the whole company is making use of those assets, particularly in Moody’s shared services. So we have had tremendous margin expansion year-over-year. We are also guiding to 50 to 150 basis points of further margin expansion this year. So we like where we are and we’re particularly cautious about the rating agency and how we handle operations in the rating agencies. So with that preamble, I’ll let Ray and Michel perhaps add any comments if they want to.

Michel, anything you’d like to add to that?

No, I would say that we are effectively looking at the options that the acquisition of Amba and the addition of Copal are bringing to us. We already are using outsourcing to some extent, but there are opportunities and we’re working on that. Flavio Campos – Credit Suisse: Perfect. That’s very helpful. Thank you for the color. And just as a quick follow-up. When we were talking about leveraged loans making up for some of the are withdrawn to gain a higher issuance. And we know that loans have – rating of loans have lower margins. Should we look this as also the opportunity of rating goes else when comeback at CLOs and those are additional revenues and a much higher margin. And if you look at leveraged loans combined with the potential for the CLOs. Is that enough to offset the mix of lower high yield and more loans that come first?

Flavio, it’s Linda. Before we get into the next issue, one of our jobs here is to correct the urban myth. And that is an urban myth. In fact leveraged loan pricing, speculative grade pricing in general is helpful to us. And that’s one that’s favorable to investment grade pricing. So you should not make that assumption that margins are lower on leveraged loans. So please make that change. And in terms of mix, we do like leveraged loans, because we rate them and then as you said, we are able to rate them again if they are packaged into CLOs, but I may have missed a little bit of the color for your two year back to your comment and I’ll ask Ray if he wanted to add anything.

No, I think Linda’s correction on the profitability of the two different areas is important, but otherwise your observation is correct, Flavio, about the fact that these loans at least have the potential for being repackaged into additional securities. Flavio Campos – Credit Suisse: That’s very helpful. Thank you.

Sure.

And we’ll go next to William Bird with FBR.

Hi Bill. William Bird – FBR Capital Markets: On your guidance, maybe you can speak to what accounts for the just slight downward tweak to your corporate finance revenue outlook. Then I have a follow-up?

Sure. There are a couple of things. I would say the first is that the market – I would observe that the market has not changed in the direction that I think the consensus view was earlier in the year in terms of higher interest rates characterized by stronger global economic momentum. In fact, we’re seeing something of the opposite. Now that’s good for refinancing, but refinancing has really been the driver for the last few years. And so while the refi part of that market continues, it’s difficult for us to project that as being a source of strong growth in the corporate sector at this point. So what we’re really looking at is whether these other drivers, M&A and capital expenditure are going to take on a more prominent role and we’ll see. There is some reason to be optimistic about what’s going on in M&A but that’s pretty recent. So as I said in some previous calls, I hope we’re being cautious on that, but we’ll see. The other two things I would just point to are, we have seen some slower growth in Asia. And the geopolitical uncertainty coming out of Russia and Ukraine is not helpful. So again we factor that into our outlook. William Bird – FBR Capital Markets: And maybe you could just speak to Europe. How would you characterize the state of your business right now in Europe?

Well, I will invite my colleagues to make some comments, but I think the business in Europe is quite healthy. The regulatory situation in Europe has been somewhat challenging as we’ve talked about on previous calls, but there has been increased stability in Europe and that is encouraging and stability in the public sector and that is encouraging for increasing confidence in the private sector and encouraging business activity and borrowing in the private sector. So for the outlook, that stability is clearly a precursor to better activity and we’re going to have to see whether the economic momentum picks up on the European side. Michel or Mark, just start with Michel just from a capital markets perspective, see if there is anything you wanted to add.

I mean the unfun way I would add is something – forwarding previous calls is really that in Europe the size continue to benefit from business disintermediation and that’s really a very important favorable development for us, but that’s the only point I would make. William Bird – FBR Capital Markets: I have a final question. Just given just a spike in your revenue growth in MIS in the year ago quarter, is it reasonable to think MIS revenues could be down in Q2?

Well, I mean it’s certainly possible, but we do think we’re going to be able to point on the board in Q2. So our central case is for growth. William Bird – FBR Capital Markets: Thank you.

And we’ll go next to Craig Huber with Huber Research Partners. Craig Huber – Huber Research Partners: Great. Thank you. First question, can you just comment a little bit further on what you’re seeing on the ratings business over in Asia?

Yes. I mean I think we have to separate cyclical from secular. I think the long-term story in Asia, it’s very positive. And I think we feel that we are well positioned in the key Asian markets, whether it’s through our own offices or through joint ventures or investments in places like Korea, China and India. Cyclically, we’ve seen some softness and few markets in Asia was weak. And really because of among other things that the downturn in speculative grade issuance globally. We also saw some weakness in the Asian market on the spec grades side. So I think we’re going to continue to be dealing with some of these short-term issues in Asia, but the long-term story is it’s something we’re very enthusiastic about. Craig Huber – Huber Research Partners: My second question please. Your non-transaction revenues within the ratings business had a very strong quarter, both sequentially and year-over-year. Can you just touch upon what’s been driving that?

Sure. I mean the growth in the monitoring fees is probably I think the most important driver there. We do have some growth in program relationships, large frequent issuers that are paying annual fees. And that’s certainly helpful. But the growth in new rating mandates that we’ve been picking up over the last couple of years, and the fact that those rating relationships trends translate into annual monitoring fees has been a big pick-up for us.

Craig, it’s Linda. Before I get into the usual conversation that you and I had, having spent a better part of the last three weeks in Asia, and Michel may want to comment on this further, we’re continued to be pleased in what we’re seeing regarding our business in China, both domestic with CCXI and cross-border. I think our China compendium says we have about 140 cross-border rated companies now coming out of China. And I think if I’ve got my memory stats we’re adding about 30 of those per year. They start off in our CCXI business of domestic issuers and then it’s growing size and scale. They become cross-border issuers as they move over to our MIS business. On part of both MIS and Moody’s Analytics. And so that part shared services as well, we are investing in China. It is a growth area for us and we have an effort [ph] to make sure that we have our greater China strategy correct. And that was supported in the growth particularly in that part of the region. And before we go onto other things, maybe I’ll pause for a minute and just see if Michel and Mark want to comment a little bit further on China specifically. Michel anything from your…

No, I think you’ve pretty much covered it.

Okay. Mark?

Please go ahead.

And I guess we would also note Craig that we are tendering for the 55% ownership of our ICRA business in India. Those who are reading carefully page 12 of the balance sheet, you’ll see an item on there which is restricted cash, which is cash by regulation we have to set aside for that tender which is for everyone’s information going through its usual regulatory review processes, and we will update as we have something further to say if that opens and then move along. So just wanted to make sure everybody is aware of that that’s going on, but that would be another indication of our investments in our business in Asia. So with those commercials, Craig, what else can we do for you? Craig Huber – Huber Research Partners: So typically like to ask you Linda, if you can just breakdown percentage basis in dollars if you would, high yield versus bank loans versus investment grade with the corporate finance and then ultimately the three main sub-segments?

Sure. I will start with corporate finance for you Craig. As we’ve said $264 million for this quarter. That’s up from $258 million last year. The percentage breakdown investment grade was 18% of revenues, which is about flat to last year. Spec grade high yields bonds down to $52.9 million. That’s 20% of the corporate finance line versus last year’s 29%. Bank loans, the opposite. We’re up to about $67 million, which is 25% of the corporate finance revenue versus 22% last year. And again those lines offset each other. And other accounts as you had noted correctly, Craig, that line has moved up to $97 million from $82 million and that’s 37% of the total. Again it’s important to call out that globally across all of Moody’s investment grade of revenues represent only 7% of Moody’s corporate revenues. And that’s just something that we think sometimes is not fully appreciated. And we do also see an over focus on the U.S. So it’s important that these trends are looked at on a global basis and that’s spec grade and investment grade are considered in total. We go into SFG, Craig. First of all, the total for structured was $95 million, up from $93 million last year. ADS, about flat at 24% of revenue, so up $23 million. RMBS also about flat at $18 million. That’s 19% of revenues, about the same the last year. Commercial real estate at 31% versus 28% last year. Up to $29 million this year. And structured credit, which includes CLOs, $25 million, that’s 26% of the structured revenue line versus 29% at the same time last year. Moving onto FIG, $85 million revenue for the first quarter of this year. And banking constituted 67% of that, $57 million. Insurance constituted 25%, $21 million. And managed investments up to 8%, $6.6 million, which is up from last year’s 4%. And then lastly, public project and infrastructure, $80 million for the quarter. And as Ray had talked about public finance and sovereign, $37 million down from last year’s $42 million, about 46% of the PPIF line. UNIF [ph] $3.8 million, which is 5% the same as last year. And then project and infrastructure $40 million, was up from last year and that’s 49% of revenues. Again we’ve talked about we’ve seen project and infrastructure being one of the beneficiaries of the disintermediation that Michel spoke about. We’re seeing that a number of these deals are coming to the bond markets in project and infrastructure finance, which previously would have been funded by banks. So that’s an helpful trend. So I think that’s it Craig. If we’ve got everything you need. Craig Huber – Huber Research Partners: Okay. Thank you very much.

And we’ll go next to Joseph Foresi with Janney Montgomery Scott. Joseph Foresi – Janney Montgomery Scott: Hi. My first question here is, how should we think about the impacts from the Ukraine? What has built into guidance from an outlook in that region, and how do you kind of risk adjust the numbers for that?

Well it’s difficult. It’s fairly easy for us to look at our business in Russia. And that is modest. So that is not a large driver of any change in outlook. But beyond that, geopolitical tensions are always difficult to address in an outlook, simply because there is the direct consequence of tension and how widespread that is. And then there is the collateral impact on business confidence and willingness to engage in business activity and focus on growth during periods of stress. So we’ve factored that into our modest reduction in outlook for the corporate finance area. And beyond that, we’re really just going to have to comment as views change depending on what happens on the ground.

And Joe, as usual to take the other side of that for you. The flight-to-quality in the U.S. Treasury has made them a very strong returning asset class for the first quarter as well. It’s about the same 7.75% that I mentioned for long duration corporate bonds. So the flight-to-quality is just the price of U.S. Treasury and has resulted in the 10-year remaining at 2.64%. We’ve been happily surprised to the 10-year under 2.7%, which I think is perhaps a bit different than many pundits have been calling for to this point of the year. So a bit of a mixed bag for us in terms of how it affects our business. And I hope that gives you kind of both sides of the story for how think about that. Joseph Foresi – Janney Montgomery Scott: Yes, that’s definitely helpful. On the Analytics business, obviously there is a positive uptick there. How sustainable is that step-up in the business? Should we think of this as accelerating, or is there a reason to be maybe a little bit more modest in our thoughts regarding it?

Mark, do you want to address?

Sure. I think that I would characterize it as pretty much in line with our expectations to be honest. We had a good quarter. Organically we were at 10%, which we feel very good about, but we’ve always thought of this business as a high-single-digit growth kind of business. So we didn’t – while we’re very pleased with the quarter, we didn’t feel like the quarter was wildly outlined with our expectations.

So again try to make sure you understand, 10% organic, 15% with the acquisitions. Again we would urge everybody to take another look at Moody’s Analytics and what it’s able to do. And as we said earlier regarding the fact that one of our major customers are banks and they are looking to use a lot of our services. We have done very well in the Moody’s Analytics in the first quarter. Joseph Foresi – Janney Montgomery Scott: All right. And then just the last one for me, just kind of general question. How should we think about issuance versus rising interest rates environment? Is there any sort of rule of thumb that you could provide as we look out on the year, different commentary from the Fed and the changes in those rate? Is there a base level for this business, and how do we kind of correlate those two?

Yes, we’ve listed this historically, and in our investor presentation, you would be able to see some of the historical data that we’ve been able to collect. And long story short is we have had periods in the past of rising interest rates that did have a negative effect on the business in terms of lower or no growth, but more recent periods we have been able to grow through rising interest rate environments. I think the reasons for that includes the fact that we have a much more global business over the last 10 to 15 years than we did back in the early 1990s. We have a much more substantial business in Moody’s Analytics, which is not as susceptible to volatility based on movements in interest rates, but that all being said, I still go back to the kind of fundamental idea that in a rising rate environment, assuming that that rate environment is rising because of economic strength, there are going to be substantial bond market activity and borrowing for reasons unrelated to refinancing, so for share repurchase and capital expenditure, merging acquisitions. Those are all important drivers of issuance in a stronger economic scenario.

And Joe, it’s Linda. I can recite this from memory. In ‘93 to ‘94, interest rates went up 200 basis points over that year-long period. And Moody’s revenue which as Ray said with much more U.S. centric at that time barely dipped. I believe it’s ‘97 to ‘98, interest rates went up 180 basis points and Moody’s revenue continued to trend up. When we do our first quarter slide, you’ll see revenues for the corporation up 5%. I’d be surprised if overall global issuance has been up from the fourth quarter of last year. It’s probably going to be flat to down. So once again, global issuance can be flat to down and our revenues move up. So it’s very important that you understand that interest rates also continue to have trouble breaking above 3% in the 10-year. We were able to see that in January. We saw it in September, but we have not seen the 10-year come back through 3% for any sort of sustained period of time. And there is pieces in journal today that higher interest rates are causing some real issues in the housing market. So again rates may move up, but they’ve surprised us for being lower longer than perhaps we and a lot of market participants kind of expected. So I think we’ll end our very long comment there. Joseph Foresi – Janney Montgomery Scott: Thanks.

And we’ll go to Doug Arthur with Evercore. Doug Arthur – Evercore Partners: Yes, Ray, just on the legal front. It seem like there were some developments in the CalFirst case in the first quarter. Can you just bring us up-to-date on kind of what inning that’s in and what’s the next step? Thank you.

Sure. You’ll recall that we had filed an appeal in California seeking reversal of the lower court decision denying our motion to dismiss the case under this, what’s called the anti-SLAPP statute in California. And there was oral argument on that in early April. I think it was April 9. And according to what I’ve been told are the rules in California, a decision on that appeal and the oral argument would be expected within 90 days following that argument. Doug Arthur – Evercore Partners: So nothing is going to move forward until there is a decision on that?

Correct. And as we’ve talked about before, that is just one small piece of a much broader case that is still in many respects in very early stages. Doug Arthur – Evercore Partners: Okay, thanks.

And we’ll go next to Tim McHugh with William Blair. Stephen Sheldon – William Blair. Hi. It’s Stephen Sheldon in for Tim. Most of my questions have been answered. But just in terms of headcount growth. You’ve talked before about expecting roughly the same growth in 2014, as you saw in 2013, which I think was roughly 9%. Any changes to that? And maybe just add some additional color on where you’re planning to add.

Sure. What have you achieved? The headcount growth excluding Amba year-over-year has grown 10% here at Moody’s. And a lot of that growth has been offshore in lower cross jurisdictions. If you split it out, the majority of the additions have been in the lines of business. And we do expect probably 9% headcount growth this year. And again a number of those – that growth will be offshore. But again we’re driving 10% to 15% growth in Moody’s Analytics, and we’ve been putting up double-digit growth on the revenue line. And in order to support that, it’s important that we are able to add headcount to support both, the ratings and the Moody’s Analytics side. So yes, we would continue to expect 9% headcount growth. But we’re judicious about where we’re adding those additional jobs. Stephen Sheldon – William Blair. Okay, thanks.

And it appears there are no further questions at this time. I’d like to turn the conference over to Mr. Ray McDaniel for any additional or closing remarks.

Okay. I want to thank everyone for joining us. And I’d also like to remind you that Tuesday, September 30, we’ll be hosting our Annual Investor Day at our headquarters here in Manhattan. For more information on this, go to the Investor Relations website as we get closer to the event. And again thank you all for joining. We’ll talk to you in July.