Moody's, S&P Global to Perform Better Than Expected, Morgan Stanley Says

Moody's (MCO) and S&P Global (SPGI) are retaining restraining outlooks despite "strong tailwinds" and an increase in bond issuances that should bolster the ratings agencies' prospects, Morgan Stanley (MS) said in a note to investors Monday. Morgan Stanley continues to contend that 2026 bond issuance will be better than what many analysts currently expect. "We remain bullish on the outlook for '26 issuance, as we expect the healthy issuance environment to continue," the note said. It cited continued recovery in mergers & acquisition, AI and data-center financing, as stable economic growth among the reasons for the optimistic outlook. Morgan Stanley expects ratings guidance frameworks of 4% to 7% and high-single-digit growth, with little expectation that they will raise their guidance of worries of interest rate stability and continued geopolitical risk. "Re-escalation remains a potential downside to issuance if it drives renewed market volatility or spread-widening," the note said. Morgan Stanley increased its price target for Moody's to $496 from $491 with an equal-weight rating, while lowering its target to $525 from $557 with an overweight rating.