Good morning, and welcome to The McGraw Hill Financial's First Quarter 2014 Earnings Conference Call. I'd like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode. We will open the conference to question-and-answer after the presentation and instructions will follow at that time. To access the webcast and slides, go to www.mhfi.com for [www.mcgraw-hill.com] and click on the link for the first quarter earnings webcast. (Operator Instructions) I would now like to introduce Mr. Chip Merritt, Vice President of Investor Relations for McGraw Hill Financials. Sir, you may begin.

Thank you and good morning. Thanks all online for joining us for McGraw Hill Financial's First Quarter 2014 Earnings Call. Presenting on this morning's call are Doug Peterson, President and Jack Callahan, Chief Financial Officer, also joining us is Ken Vittor, our General Counsel. This morning, we issued a news release with our results. I trust you have all had a chance to review the release. If you need a copy of the release and financial schedules, they can be downloaded at www.mhfi.com. In today's earnings release and during the conference call, we are providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management's. This earnings release contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. Before we begin, I need to provide certain cautionary remarks about forward-looking statements. Except for historical information, the matters discussed in the teleconference may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates and descriptions of future events. Any such statements are based on current expectations and current economic conditions and subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. In this regard, we direct listeners to the cautionary statements contained in our Form 10-Ks, and 10-Qs and other periodic reports filed with the U.S. Securities and Exchange Commission. I would also like to call your attention to the recent European regulation. Any investor who has who expects to obtain ownership of 5% or more of McGraw Hill Financial's should give me a call to better understand the impact of this legislation on the investor and potentially the company. We are aware that we do have some media representatives with us on the call. However, this call is intended for investors and we will ask the question from the media to be directed to Jason Feuchtwanger in our New York office at 212-512-3151 subsequent to this call. At this time, I would like to turn the call over to Doug Peterson. Doug?

Thanks, Chip, and good morning. It was great to have a chance to meet with many of you during our recent Investor Day, and we thank you for your participation and feedback on the event. Most of the key messages we delivered on Investor Day, are focused on creating growth and driving performance. Setting annual growth goals and maintain disciplined capital allocation, more actively managing businesses, completing our portfolio rationalization and driving productivity savings are all part of this focus. The year is off to a solid start, despite the decrease [reported] increases in both, revenue and earnings for the quarter. Platts and S&P Dow Jones Indices delivered double-digit revenue growth, driving the overall MHFI growth in the quarter. During Investor Day, we spoke about our global footprint and the opportunities we see for international growth and during the first quarter international revenue growth of 7% was more than twice that of domestic growth. During the quarter, we reported free cash flow $85 million and returned $246 million in dividends and share repurchases, which continues to demonstrate our commitment to returning capital to shareholders. If we look at the financial performance during the quarter, revenue increased 5% year-on-year and 6% from organic growth. Adjusted operating profit increased 8%. We achieved a 100-basis point improvement in the operating margin and adjusted diluted EPS increased 12%. The strength of our portfolio is clearly evident this quarter. Weak issuance hindered the growth at S&P rating services, but S&P Dow Jones Indices in commodities and commercial markets delivered double-digit operating profit increases. This chart shows how our non-ratings businesses comprised 48% of operating profit, up from 41% a year ago. S&P Dow Jones Indices and Platts once only small parts of our portfolio have grown into major contributors. Now let me turn to the…

Thank you, Doug. Good morning to everyone joining us on the call. This morning, I want to briefly discuss several items related to first-quarter performance. First, I want to recap key consolidated financial results in the quarter. Second, I will review some accounting related changes. Third, I will provide updates on the balance sheet, free cash flow and return of capital. Finally, I will review our guidance. In the first quarter, revenue grew 5% with organic revenue growing approximately a point faster, excluding the impact of Aviation Week as well as the sales of Financial Communications and small product line closures at S&P Capital IQ. Segment operating profit grew 9%, driven by the strong results in commodities and commercial markets in S&P Dow Jones Indices. In addition, after cycling through a period of stepped-up investments, S&P Capital IQ has delivered adjusted profit growth in each of the last three quarters. Adjusted unallocated expense increased by $6 million, primarily due to an increase in unoccupied office space resulting from recent divestitures as well as the tiny of certain professional fees. In addition, the first quarter is the most challenging comparison of the year for this particular expense item. In line with our previous guidance, the tax rate was 34% in the quarter, a decrease of 100 basis points versus the first quarter a year ago. Our adjusted net income increased 9% and adjusted diluted earnings per share increased 12% to $0.89. There was a reduction in average diluted shares outstanding of approximately 7 million shares versus the year ago period. While there were no adjustments to GAAP results this quarter, there were two accounting-related changes that are noteworthy. The first has to do with unallocated expenses. As part of the transformation to McGraw Hill Financial, a comprehensive review of accounting and…

Thanks, Jack. Just a couple of instructions for our phone participants, (Operator Instructions) Operator, we will now take our first question.

Thank you. This question comes from Manav Patnaik with Barclays. Your line is open.

Thank you. Good morning, everybody. Just to touch on the rating side first, in terms of the incremental expenses you are putting in for headcount and technology and so forth, I was just curious, how much longer through the quarter should we see that flowing through the number like when does margin start showing that that year-over-year improvement is I guess where I am getting to.

Expense growth was mid-single digit in the ratings business, in the first quarter, we are not anticipating some big significant step ups as we go through the year. I think the margin expansion will be based in part what we see in terms of perhaps improved issuance trends over the balance of the year, combined with our ongoing cost reduction programs, but we continue to expect some reasonable sustained margin in this business going forward.

Okay. Then in terms of the structured finance performance, I was curious if you could comment a little bit more on the dynamics there I think. Was it more a case of have the comps or share losses just because your competitor obviously cited a slightly better results in their structured finance line.

This is Doug. It's a combination of both. As you know, the structured finance market overall globally was down a lot. The global decrease in structured finance issuance was actually 13% in number of issues and 9% in terms of par volume and billions of dollars and that was even down further in the United States. It was down by almost 12% in dollar volume in the U.S. and 23% in terms of number of issues, so there was a significant decrease. The European structured finance markets, as I said earlier, remained completely anemic, with the exception of covered bonds and the covered bond issuance is a pretty standardized ongoing set of issuance so we saw a combination of very weak structured finance market. Our market share has fluctuated depending on what kind of asset class you are talking about. Recently, we have not been at as high of a market share in CMBS, but in other asset classes we are continuing with the traditional market shares we have had.

Okay. That's helpful. Just one last housekeeping, Jack, in terms of the flat guidance for unallocated expense. Can you just clarify what that 2013 numbers should be that we should model as flat?

…you will see it detailed in Exhibit 8 of the appendix. On a full-year basic, it's $129 million.

All right. Okay. Thank you guys.

Thank you.

Our next question comes from Alex Kramm with UBS. You may ask your question.

Good morning. Maybe just coming back to the guidance, obviously remains pretty unchanged here. Maybe I missed it, but the bigger picture of what are the levers up, down relative to a quarter ago where you feel strong or weaker, what businesses do you think are running ahead and where do you see areas of maybe a little bit of concerned where you would - weaker than before.

Let me start just from a strategic point of view, we are very pleased with the new management team we have in place, our approach to how we are managing the business in allocating capital. A lot of our investments that we have been making in last couple of years have turned out to be the right one, so each business has its own opportunities for growth whether it's new asset classes, new products, customer penetration as well as expansion into international markets, so those are the ways that we are driving the performance and looking at where we put more emphasis and more growth. Clearly, were subject to, in many of our businesses to market volatility that we can't control, but what we can control which is our exposure on where we place our resources and where we are focusing our growth as well as how we manage our margins and manage our expenses, we are doing all we can to control where we can position ourselves for growth and margins, but obviously we do have some market volatility, we always have to live with.

Maybe I'll comment on Doug's comments, just back to guidance assumptions, I would tell you across our all the business I think are very much in line with our ingoing assumptions with maybe the possible exception of the slow start that we saw on our bond issuance within rate. Balance of that I think we feel pretty much in line and I think we will be monitoring that obviously over the balance of the year and much more stable now than it was at the start of the year.

Okay. Great. Then maybe just to dig in a little bit on the rating side again, one of the things I think that continues to stand out is the non-transaction fees and 9% growth this year I mean that's almost like fantastic number. That's recurring right? What are the levers that can drive this up or down we think over the next couple of years and is this a sustainable growth rate or could this accelerate through whatever you are seeing out there or what are the reasons that could slow this down to maybe something like the mid-single digits.

Well, there are various aspects of this that drove it during the quarter. If you recall, there was a lot of M&A activity in Europe, so our of Rating Evaluation Services are one of those areas which was quite attractive for the markets during the quarter. We have seen over time 9%, 7%. We have seen steady growth in this area. It hasn't been always as robust as the 9%, but over the last four quarters it's been over 6% every quarter. It has averaged over 7%, so we think it's a combination of shifts in capital markets that kind of work that a financial institution and corporates need to look at their ongoing long-term capital raising. Also, as large issuers around the globe, especially in Europe and other markets become much more frequent issuers, they shift from a transaction model to a non-transaction model, so there are a lot of secular trends which help us on this, but obviously we are not going to project out that it's always going to be 9%.

Alex, one thing I will add. This is Chip. If you look at the strength we've had in issuance over the last couple of years that then leads to better surveillance numbers in the years that follow.

Yes. Very helpful. Thanks.

Our next question comes from Hamzah Mazari with Credit Suisse. Your line is open.

Hi, there. This is Flavio. I am standing in for Hamzah today. How are you guys.

Good.

Just a quick question, first on the indices business, assuming that there is big margin expansion, a big part of is due to the revenue recognition issue and that's falling at a incremental margin. Can you help us understand how the margins will look like without that change?

One, obviously, we benefited from that one-time catch up in the revenue recognition, but this is as we mentioned this is partly the only quarter where we will have that impact. If you were just to back out basically half the revenue from this quarter…

The half of revenue increase.

The half revenue increase, so that would give you a better judge of what more run rate may look like going forward.

Then take the operating profit as well. I did the calculation the other day. It was just a few percentage related to that. 3% is the difference.

That's very helpful. You guys talked about the structured finance a little bit. I just wanted a little, if you could a little more color on the commercial gas market. That market has been getting some strength recently and are you guys seeing that and how do you think your position is within that specific market?

You are talking about the CMBS market?

Yes.

Actually the CMBS market has been next. The strength has been in the last few weeks, but in the quarter it was a down 15%, actually 15.8% in terms of the par value of dollars and number of issuers were down almost 12%. The market has been quite volatile. There is a very different quality of properties coming into the CMBS market, so there's a lot more variability into what the asset class is and what type of assets are in it, whether it's higher-quality properties, lower quality property. How diversified the portfolios are, so we have a very competitive criteria which is understood by the markets. It's a competitive market, we have very good team there and it's one that is as you can see from the new entrance into the market and the rating agencies it is a very competitive part of the market, but we are very well positioned and we have been capturing some of the volumes and it's an area that we have a major focus on.

That's very helpful guys. That's all I had. Thank for taking my questions.

Thank you.

Our next question comes from Andre Benjamin with Goldman Sachs. You may ask your question.

Hi. Good morning. First, I wanted to dig into the margins a little more detail, I know but not touched on Ratings margins, but I was wondering if you could spend a bit of time adjusting how you think the margins for some of the other businesses may progress through the year, particularly Capital IQ, then commodities and commercials given the investments you are make in growth.

Andre, we are trying to avoid get too detailed into specific margin expansion by business. We are trying to manage a portfolio here. That all being said, if I comment on some of the dynamics for the specific businesses in addition to earlier comments on Ratings. I think in Capital IQ, I think you have seen now over a couple quarters that were largely cycling through those investments and we are going to look to kind of sustained some margin expansion going forward, particularly as we gain the benefits and we are quite encouraged by some of the early indications some of the new functionality and products that are coming into the marketplace. Across commodities and commercial you know we have had stellar margin expansion in those businesses over the last few quarters. I would think we look to have some continued may be modest expansion there, but our primary focus there is really driving the top line growth of Platts J.D. Power, which are both double-digit right now so our focus there is growth.

Let me just add that one of the things that we want to make sure that you follow carefully throughout the year is a year-on-year comparisons in what we call an organic. Since it sounds strange to talk about organic growth and you see margins going up from there, but we exited lower margin or slow growth businesses or underperforming businesses and so one of the other aspects of our margin expansion is going to be as we look at comparisons of our operating businesses without those slower growth and slower driver businesses that are included, so that's part of the business was reconditioning the portfolio and rationalizing it towards businesses want to invest in.

Thank you. I guess, one more housekeeping question on the litigation. I know you mentioned that Analyst Day, I believe you said the judge was pushing for both sides in the DOJ cases to come to trial by September 2015. That's honestly a moving target, but could you remind us what some of the next key milestones are whether there are any tangential channels like the one you mentioned this morning that could have some read across in the meantime.

Ken Vittor is here with us to answer that question.

Yes. There is no scheduled trial date. The judge has asked the parties to submit and we have a joint statement as to what would be an acceptable trial date and subject to certain caveats. The parties have indicated in September 2015 trial date, but the judge has not ordered that. There is no scheduling order yet as to a specific trial date. In terms of the next date to be looking at, the judge has a hearing in May on May 27th, where he will resolve issues relating to the process by which privilege issues associated with the documents that he has ordered to be produced to S&P in response to our motion to compel, how that will be handled either through a special master or magistrate, so that will be the next hearing in the case. In terms of this Space Coast case, which your referencing that is a very helpful ruling in granting our motion to dismiss, the court issued a ruling which said that it's not enough to claim that they were generalized concerns about rating agencies or the business model, but issuer paved model that you have to tie whatever your generalized concerns are about rating agencies to the specific CDOs that the plaintiffs claim they lost money on. That failure to alleged with specificity led to the second dismissal in the Space Coast case and we will be using that precedent in the DOJ case and other cases, because there is a similar defect in many of the complaints filed against S&P in that they have generalized concerns about how the rating agencies operated during the financial crisis, but they don't tie them to the specific CDOs that are at issue either in the DOJ case or the other case, so we think that's a very helpful precedent for us.

Operator?

Our next question comes from Joseph Foresi with Janney Capital Markets. You may ask your question.

Hi. I wanted to understand what is built into guidance at this point from a bond issuance perspective for the remainder of the year and how do you think about the trajectory of the business? What are your thoughts behind that?

I think, we are still going to have, while we are seeing a step in issuance. Certainly saw that in March, continuing into April. You know, there is very difficult comp on issuance in the second quarters, so that's going to be a tough comparison, but then I think again in the third and fourth quarter, we anticipating some solid growth and that's in part point to strong performance.

Okay. Then I think, earlier you had talked about margins being up in all businesses this year. I might heard that incorrect, but I think you had mentioned that maybe on your last call. How should we think about the margin profiles of different businesses? It is more of a portfolio effect this year? Has that changed it all?

Well, I mean, I think what we are trying to point to is, overall our guidance is assuming at least a one point margin improvement overall across the entirety of our businesses. I think that's been sort of the guidance that we have given. All being said, there building on our comments earlier in both ratings and capitals and commodities and Cap IQ, we do think we should have some sustained margin improvement as we cycle through the/the year.

Okay.

If you look at the first quarter, I mean, we had margin improvement in all the businesses with the exceptional of the Ratings business and that's understandable with issuance environment, so with a better issuance environment you could see margin improvement there.

Sure. Then just fully understand the accounting change, any impact to guidance from that change on an annual basis and does that offset the businesses that were shut down? I think, you said there was 1% impact from those businesses being shutdown.

There is no change in guidance, because this accounting change was fully considered in both, our financial plans and in our initial guidance, so there's no impact to where we were a quarter ago.

All right. Thank you.

Thank you. Our next question comes from Peter Appert with Piper Jaffray. You may ask your question.

Thanks. Jack, I want to make sure I fully understand the change the next index business in the first quarter. Should we assume that the incremental revenue you got from the change basically all flows through to operating income?

Yes. Largely it does, but just remember that from a bottom line point of view on 73%, it's the EPS, so it has about $0.02 EPS impact on the quarter.

Okay. What you think the right run rate for operating margins within the index businesses is on a sustainable basis?

I think we are approaching 60, right? Maybe did better, but one of the things we are benefiting from here is that we had picked up you know, Doug's comments, we picked up some additional licensees that are also benefiting the portfolio, so I think we are in an obviously at a very enviable position in that business.

Got it. Could I ask just two other things? One, Jack, can you talk a little bit about how you are thinking about the timing of repurchase activity over the balance of the year? Then secondly, any color on traction in terms of new asset classes in the Platts business. Thanks.

In terms of share repurchase, we are going to stay flexible on that one. As you saw, we were pretty active in Q1 and that we have a lot of flexibility relative to our authorization, so we will update the market as we go through quarter-by-quarter.

On Platts, we are looking at expanding. If you think about the Platts business, it's got a large concentration in petroleum and petrochemicals, fair related to that so we are seeing a lot of interest in getting more transparency in the market using more benchmarks as these markets become more global and there more complexity, more information floating around large stake on what happens with countries and companies et cetera. so we are looking at expanding into further expansion to metals, ag, power and gas, so we're going to be looking at organic, inorganic opportunities, but specifically we have a lot of interest in growing in the other, diversifying into other types of commodities just petroleum.

Operator?

Our next question comes from Doug Arthur with Evercore. You may ask your question.

Yes. Two follow-ups. On the loss of the UBS commodity business, is a is that - I mean, obviously that's built in the guidance and your general sense is that other products will, that are coming on strong are going to kind of nullify the impact of revenues. Is that a fair assessment?

I think, a fair assessment from a profit point of you. There could be a little bit of revenue impact more in the back half of this year and going into the first part of next, but from a bottom line point of view I think we have it offset.

Okay. Then just as follow-up with Ken on the line. Ken, what is your sort of timeline expectations in the Calpers' case through the end of '015 at this point? I know there has been a lot of back and forth.

Yes. It re-appealed the denial of the motion to dismiss or logging was held and the appeal was pending, so the timing will depend on when the Court of Appeals issues a ruling on our appeal of the motion to dismiss.

That was based on a flat?

Yes. Exactly.

Our argument in the motion is that in order to have a negligent misrepresentation claim in California, it has to relate to a past or present fact and we argue that the court below got it wrong by treating an opinion as a fact when all of the courts across the country have treated ratings uniformly as opinions, future looking opinions, forward-looking opinions, so our argument is there can be negligent misrepresentation claim by Calpers because the predicate is missing. There is no present or past fact that has been misrepresented when you have a ratings opinion.

Any expectation on timing of the ruling?

No. It's totally subject to the court's calendar.

Okay.

I think as I said the oral argument was held the case is pending.

Okay. Thanks.

Our next question comes from Tim McHugh with William Blair. You may ask your question.

Hi, guys. Thanks. Most of my questions have been answered, but two quick ones I guess. One on the UBS commodity contract, I know you said it's not much of an impact to profits, but more so to revenue. Can you size that at all for us, I guess, more or so for the second half of the year in terms of what to expect?

We would try and stay with the overly explicated about our existing contracts, but let's just call it a couple of points above revenue growth, but very manageable.

That's a couple of points to that business or to the overall business?

Just to that business.

Okay. Then within Capital IQ, you talked about Desktop growing 8%, but I guess even your Desktop and Enterprise Solutions only grew 4. I guess, what's offsetting that and can we see anything I guess that overall part of the business creep up towards that high single-digit growth rate that you described just for the Desktop part of the business. There is a set of different products that we have under this and see Capital IQ Desktop and Enterprise Solutions and we have got portfolio risk, we have got [compu] stat in there we have we've got consolidated feed. We are investing in that business and recently we acquired a business in Europe called QuantHouse we are doing investment in there and we think those will be obviously paying off at some point in the future, but what's really important for us right now is to drive the Desktop growth. This is critical, because it gets our key product into people's offices and we are investing in the new capability in the desktop which we think are very clearly targeted at the needs of credit analysts and portfolio analysts and others, so there that this will help us drive our growth in the future, but that's one of the reasons we wanted to highlights 8% specifically in Desktop.

How would that 8% compared to last year though couple of years. I can't recall if you have broken it out in that much detail.

Well, we haven't broken it by much detail, but I mean, the Desktop business has been growing kind of 5%, 6%, 7-ish percent for the last couple years. We have been pretty pleased and we will talk about this that our Desktop business is certainly gaining share. Let's put it that way.

The growth this quarter it's basically a continuation of the trend or did the growth pick up is what I was trying to understand.

Yes. I mean, we don't really quibble over 1% or 2%, so.

Okay. All right. Thank you.

Thanks.

Our next question comes from Craig Huber with Huber Research Partners. You may ask your question.

Yes. Good morning. Just can you talk a little bit further about your outlook here for the transaction-based revenues within ratings? The second quarter you alluded to how tough year-over-year comp is there, but are you expecting that to be flat to down in the second quarter. Just curious with your backlogs are you seeing in the next couple of months.

I think our guidance can manage to exactly what you said, flat to modestly down. Then over the balance of the year we do in part driven by much, much some easier comps, particularly in third quarter. We would see return to solid growth in the back half of the year.

Also you guys have been very good on the rationalize your portfolio in recent years. I am just curious if you think there is much left to go on that front going forward, besides what you have already announced on the construction side.

I think Construction is the most significant. There might be a few small products here and there, but nothing that I would imagine significant.

Our focus right now, Craig, is more below we can do to build the portfolio and add to growth.

Shifting to the unallocated expenses back down to the operating units, I am just curious will that change the mindset at all with your managers of the various business units to be more cognizant of those expenses or are they already very well contained - already embedded in what their metrics are based on the compensation every year.

Well put, Craig. No, I think one of the part of this change is to have more visibility, more alignment on the total cost of doing business, so yes I do anticipate that collectively we will have a lot more focus on what we can do to manage these shared costs and make them a contributor to ongoing margin enhancement going forward, so I think some real benefits of having everyone working out the same set of numbers.

What I would say that you answered your own question in question.

With that, I do have one more quick question please.

Do have an answer for it?

Your share buybacks at 2.2 million shares you guys bought back, is the DOJ case in your minds holding you back from picking up the shore buybacks meaningfully from these levels? No. Look, I think as we said before, I think we have an extraordinarily flexible and strong balance sheet I think that gives us a lot of flexibility going forward, so it maybe a consideration in the sense that we want reserves of flexibility, but I think we have adequate flexibility to have a lot of choices via the either share repurchase and/or addition to the portfolio.

Thank you.

Thanks.

Our next question comes from Bill Warmington with Wells Fargo Securities. You may have ask your question.

Good morning, everyone.

Good morning.

Hi, Bill.

One question for you, follow-up on the S&P Dow Jones Indices, with 80% year-over-year growth in Q1, you had mentioned that half of that growth is from the revenue recognition. Just wanted to ask about how we should think about the growth rate for that division going forward, high single-digit, low double-digit or what should we think about it?

It's kind of highly dependent on what's going on with what your view of the market is going forward, because it's so based on capital that flows particularly into ETFs and mutual funds, can be also impacted by volatility, so it's hard to kind of point to a steady state sort of growth rate going forward. You know right now I think for the first half of the year growth probably is in the similar to what we saw on Q1 less the impact of the accounting change and maybe not quite as strong in the second half, because of the modest impact of some of the loss on revenue on UBS. Then I think you get overlay what your view of the equity markets going forward.

I would add though that clearly, we have this impact from markets that Jack mentioned, but on the other hand we are investing for growth in markets like Korea and Taiwan. Last quarter, we invested in Mexico and Colombia. We bought out the BMI and GSCI, so we are investing in areas of the markets where we think there will be growth like the emerging markets like Asia, so we don't want to have a one trick pony and just be dominant by the S&P 500. We want to take advantage of that brand and the expertise in the platform that we have, add more product and more capacity into it, so you should be hearing from us over time a lot of these types of partnerships and investments, which also are going to help drive growth. They might not drive growth next quarter or the quarter after that. It might take a while to see the growth coming through, but we think with the type of globalization markets we want to be using that is also a place where we play.

If I can add just one last thing, with ETFs being the dominant portion of that business, even in a flat market environment your are still seeing inflows in the Platts investing and about 12% of the increase in AUM came from Inflows, so we think that trend will continue.

Continuing on that theme, there has been talk about in index property potentially on the block and I wanted to ask about your thoughts about M&A opportunity in that business. We don't comment on speculation or things that are being discussed in the market.

Okay. Then one housekeeping question. Just if you happen to have the fully diluted shares outstanding exiting the quarter - taking into account the buyback?

I think it's 277.

277? All right. Thank you very much.

Thank you.

We will now take our final question from Ed Atorino with Benchmark.

Hi. Thank you. You mentioned CMBS down 13%. Any other big categories you would like to highlight as either up or down in the ratings in the quarter?

Well, from the point of view of the market issuance overall, the quarter as I said earlier was a choppy quarter. It began with incredibly low issuance in January and February. There was a lot of discussions about what happening with the Fed, with tapering with interest rate movements et cetera, so the first two months of the quarter were very slow. March was picked up the pace and there was a lot more issuance, so when you look across all of the asset classes, generally speaking they were down - for total worldwide issuance was down, in terms of number of issues was down 25% and in par value it was down 4%. As I mentioned earlier, that also impacted some of our earnings, because some of the deals were so large. Structured finance was down 9.4% in the par value and down 13.1% on number of issuance globally, so you start looking at market-by-market. Generally speaking, the first quarter, there was a lot of volatility. Chip could provide you more details on them market-by-market offline on that.

Okay. Second question, I'll need to be a wise guy. You are buying in a lot of shares then you issue a lot of shares. Is there a strategy there? I mean, it sounds like it just spins the wheels.

Well, I mean, there are two different things, right? Buying back shares is the allocation of capital and in terms of the choices that we have, the issuance of shares has all do with compensation and I would think it's appropriate particularly for a company like ours which is made up of relatively higher paid executives to have some of their incentive compensation based in equity related vehicles such that we have aligned interests between large value creation and that of our shareholders.

If you look over time, you can see a steady decrease of our shares outstanding.

That's true. It is a net decline. Thanks.

You have particular quarters [first] quarter where your are rolling out more compensation, so you have the offset and that's what we kind of highlighted that one of the Jack's slides.

Terrific. Thanks much.

Thank you. All right. That includes the call, so would like to thank you for joining us and we will talk to you in future. Thanks.

That concludes this morning's call. A PDF version of the presenters' slides is available now for download from www.mhfi.com. A replay of this call, including the Q&A session will be available in about two hours. The replay will be maintained on McGraw Hill Financial's website for 12 months from today and for one month from today by telephone. On behalf of McGraw Hill Financial, we thank you for participating and wish you good day.