It’s been eight months since Common Music Group listed on the Amsterdam Inventory Trade.
At this time (Might 31), the world’s greatest music rightsholder was assigned its inaugural credit score rankings since going public from two of the world’s three main ranking companies.
UMG has been assigned a first-time Prime-2 quick time period credit standing, and a Baa1 long run credit standing “with secure outlook” by Moody’s Traders Service.
As well as, S&P World Scores has assigned the corporate an A-2 quick time period credit standing, in addition to a BBB long run credit standing “with secure outlook”.
In a media assertion asserting the rankings, UMG says that it “considers these funding grade rankings as supportive of its financing technique and is dedicated to sustaining an funding grade ranking”.
UMG says it was suggested by Financial institution of America throughout each credit standing processes.
Common’s rankings announcement comes 4 weeks after the corporate revealed its monetary outcomes for Q1 2022.
Throughout all of its divisions (together with recorded music, publishing and extra) UMG posted revenues within the three months to finish of March of €2.199 billion ($2.46bn).
That was up by 16.5% YoY at fixed foreign money, pushed by progress throughout all income segments.
Commenting on the rankings information in a media assertion issued right this moment, Boyd Muir, UMG’s EVP, CFO and President of Operations, mentioned: “We’re happy that, within the inaugural rankings since our public itemizing, the ranking companies have recognised our robust credit score attributes.
“Each companies highlighted our management within the music business, best-in-class catalogue, recurring and well-diversified income streams and low leverage as key drivers of those stable rankings.
“The Baa1/BBB ranking project is one other optimistic recognition in our early days as a stand-alone publicly listed firm.”
“We’re happy that, within the inaugural rankings since our public itemizing, the ranking companies have recognised our robust credit score attributes.”
Boyd Muir, UMG
In a press launch explaining its ranking choice for UMG, S&P says that the music firm “advantages from its high market place within the rising music business, in addition to its massive and well-diversified world portfolio of recordings and compositions throughout a number of genres”.
S&P notes that UMG “enjoys secure and predictable income, earnings, and money circulation due to a excessive proportion of subscription income by means of streaming,” and that the corporate’s “distinctive music library will proceed to generate largely predictable and stable income, earnings, and money circulation”.
Added S&P: “In our view, UMG’s low leverage supplies the group with ample monetary flexibility, however we have in mind the opportunity of massive debt-financed catalogue acquisitions or considerably increased dividends.”
“The Baa1 ranking displays the corporate’s robust working momentum supported by the secular progress prospects of the music business fueled by rising shopper adoption of on-demand music streaming platforms, social media apps and different rising digital platforms.”
Agustin Alberti, Moody’s
Moody’s, in the meantime, says in its personal press launch that the rationale behind its ranking for UMG displays “the continuing transition to a extra predictable and recurring income profile primarily based on the expansion of streaming and publishing revenues”.
The ranking company additionally cites what it says is, “the secular tailwinds for the worldwide music business’s long-term progress fueled by robust shopper adoption of paid subscription streaming providers, social media apps and rising digital platforms that Moody’s expects to proceed, significantly in rising markets”
Different causes for Moody’s rankings project embrace UMG’s “good monitor file in supporting and growing artists’ careers by means of its world community of iconic labels and publishing corporations overlaying 200 markets”, in addition to, “a best-in-class music catalog with good geographic variety and monetization alternatives,” plus, “an skilled administration group with a confirmed monitor file of adapting to new developments by means of innovation”.
Amongst “elements that might result in a downgrade or improve of the rankings” listed by Moody’s, the company states that, “downward strain might develop if there may be deterioration within the firm’s enterprise mannequin that ends in a fabric, sustained erosion of its main market place, profitability or money circulation technology.
Provides Moody’s: “The rankings might additionally face downward strain if administration adopts a extra aggressive monetary coverage, undertakes sizeable acquisitions or funds massive share buybacks with debt.”
Agustin Alberti, a Moody’s Vice President – Senior Analyst and lead analyst for UMG, mentioned: “The Baa1 ranking displays the corporate’s robust working momentum supported by the secular progress prospects of the music business fueled by rising shopper adoption of on-demand music streaming platforms, social media apps and different rising digital platforms,”
“The ranking can also be supported by UMG’s prudent monetary coverage as mirrored by its present low leverage and the general public dedication to a stable funding grade ranking.”Music Enterprise Worldwide
