Good morning, and thank you for joining us to discuss Moody's fourth quarter 2021 results and our guidance. I'm Shivani Kak, Head of Investor Relations.

This morning, Moody's released its results for the fourth quarter of 2021, and our outlook for full year 2022 and the medium term. The earnings press release and the presentation to accompany this teleconference are both available on our website at ir.moodys.com.

Rob Fauber, Moody's President and Chief Executive Officer, will lead this morning's conference call. Also making prepared remarks on the call this morning is Mark Kaye, Moody's Chief Financial Officer.

During this call, we will be presenting non-GAAP or adjusted figures. Please refer to the tables at the end of our earnings press release filed this morning for a reconciliation between all adjusted measures referenced during this call in U.S.

GAAP. 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, 2020, and in other SEC filings made by the company, which are available on our website and on the SEC's website.

These, together with the safe harbor statement, 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 will now turn the call over to Rob Fauber.

Thanks, Shivani, and good morning, everybody, and thanks for joining today's call. I'm going to begin by summarizing Moody's full year 2021 financial results, and then I'll provide an overview of our business and strategic direction.

And following my commentary, Mark Kaye will provide some further details on our fourth quarter 2021 results and share our outlook for 2022 and also our new medium-term financial targets. And after our prepared remarks, as always, we'll be happy to take your questions.

Our employees' resilience and commitment and hard work produced some exceptional results in 2021. And I'm proud to share that for the first time, we surpassed $6 billion in revenue with record revenues from both MIS and MA.

And adjusted diluted EPS grew at 21% in 2021. Over the past several years, we've invested to build our businesses serving high-growth risk assessment markets.

And in 2021, in particular, to seize the really attractive growth opportunity in front of us, we made some substantial investments, particularly in the fourth quarter. Across the firm, we're introducing a range of new products and solutions to help customers identify, manage and measure risk and unlock opportunity, and the pace is accelerating.

We're balancing these investments with capital returns and seek to return approximately $2 billion to our stockholders this year in the form of dividends and share repurchases. For 2022, we project Moody's revenue to increase in the high single-digit percent range.

That's driven by continued strong growth from MA and robust global debt issuance levels for MIS. And I'm also pleased to announce that in response to investor feedback, we're introducing new medium-term guidance, including Moody's Corporation's revenue to grow by at least 10% on an average annualized basis and adjusted operating margin to be in the low 50s percent range.

Recent acquisitions, combined with organic investments, put us in an excellent position to deliver on our integrated risk assessment strategy and achieve these targets. Finally, I want to remind you that Moody's will be hosting our next Investor Day on March 10 later this year in New York City.

And during the event, we're going to be showcasing key aspects of our business, and I look forward to meeting many of you in person. It's been a while.

And for those who are unable to attend, there will also be a virtual option. Now turning to full year results.

Both MIS and MA revenue grew by 16%. MIS rated over $6 trillion of issuance and generated over 1,100 new mandates, and that's equivalent to almost 5 new mandates every working day of the year.

And this, combined with MA's 56th consecutive quarter of revenue growth, helped us achieve our second successive year of 20-plus percent adjusted EPS growth. 2021 was really a year where we accelerated our strategy to be the world's leading integrated risk assessment business, that included investing for growth, purposeful innovation and delivering for our stakeholders.

During the year, we made a series of acquisitions to enhance our capabilities and further build out our offerings. The largest of these acquisitions, RMS gives us a world-class insurance data and analytics franchise as well as some sophisticated weather and disaster modeling capabilities.

And this allows us to serve a wide spectrum of customers, helping them to better understand the physical risks posed by climate change. And that's an important part of our broader ESG offerings.

We also made investments to build out our ratings presence in important international markets. And in 2021, we began offering local credit ratings in Brazil as part of the continued expansion of our Moody's Local business across Latin America.

And just last week, we announced our intent to acquire a majority stake in GCR ratings, the leading credit rating agency in Africa, giving us an unmatched presence across the continent and really positioning us for the future. In 2021, we expanded our suite of award-winning offerings with more than 15 meaningful product launches.

This includes PortfolioStudio, our new cloud-native Software-as-a-Service credit portfolio management tool. It provides a single and powerful view of risk.

As part of our broader ecosystem of risk finance and lending solutions, it enables our customers to identify and measure and manage portfolio risks and returns by combining best-in-class Moody's models, scenarios and other content with business applications for financial institutions. We also launched the next generation of supply chain catalysts, providing our customers with an enterprise view of their critical supply relationships.

Supply chain catalyst combines our Orbis database with customers' internal data to deliver an integrated view of risk across multiple tiers of their supply chain and taking into account factors like financial health and sustainability and reputational risk among others. And finally, we continue to focus on serving our people, our customers and our communities.

Our DE&I initiatives have received some great external recognition, helping to distinguish Moody's as an employer of choice. And that has never been more important than right now.

In addition to the accolades that you see on this slide, we were just notified of our inclusion in the Bloomberg Gender Equality Index for the second year in a row. And for the 11th year running, we're very proud to have received a perfect score from the Corporate Equality Index.

And on top of these awards, we've achieved recognition from customers for our products and services. And among many other awards, we were named the best credit rating agency by Institutional Investor for the 10th straight year and we're ranked #2 overall in the Charters RiskTech100.

Now switching to our segment results, beginning with MIS. Favorable market conditions contributed to our strongest year yet in terms of both revenue and rated issuance.

And investment-grade supply moderated off what was really a record 2020, but volumes were still substantial. Meanwhile, the leveraged loan market rebounded sharply, and it was bolstered by low default rates and an uptick in private equity buyout activity as well as increased investor appetite for floating rate debt amid higher inflation.

Strong leveraged loan volumes also supported some very strong CLO growth. And more broadly, structured finance issuance rebounded, and that was due to ongoing favorable market conditions, including tight spreads, and that drove both new CLO as well as refinancing activity and CMBS and RMBS issuance in particular.

As we consider the issuance drivers and factors for the year ahead, broadly speaking, the economy has demonstrated resilience to the impact of Omicron. GDP is growing.

Companies are performing well and job creation continues, all of which underpin business, investor and consumer confidence. But there are headwinds.

Inflation remains elevated amidst supply chain constraints in tight labor markets, although we expect price pressures to abate over the course of the year, but still uncertainty around the future path of interest rates may invite some occasional bouts of market volatility. And we've certainly seen that in the start of the year.

Historically, a rising interest rate environment, when associated with robust economic activity, has been a positive for MIS. And I think it's worth noting that even with the potential for interest rate increases this year, overall financing rates will remain at very modest levels from a historical perspective.

We forecasted tight spreads, M&A transactions, ongoing refinancing needs and disintermediation will support global debt activity above medium-term historical levels, but with issuance slightly moderating versus record levels in 2021. And Mark is going to provide some details on MIS 2022 issuance expectations later in the call.

Now, moving to Moody's Analytics. In 2021, MA's revenue grew by 16%.

We also meaningfully increased the mix of recurring revenue, which now represents 93% of MA's total revenue. And underpinning this performance were 9% organic revenue growth supported by a 95% retention rate, over 2,000 new customer accounts added through a combination of global sales execution and acquisitions and targeted investments in high-priority markets.

And this momentum gives us the confidence to capitalize on the strong demand and market opportunities across MA by continuing to invest both organically and inorganically. And we're doing just that.

In 2021, with a purposeful acceleration in the fourth quarter, we invested to enhance and fast track the launch of several product offerings. For instance, in the fourth quarter, we acquired PassFort and invested to accelerate our integration with the goal of significantly advancing the development of our customer screening and onboarding capabilities.

By digitizing and automating the KYC and AML process for our customers, we're providing a streamlined workflow along with data from our Orbis and GRID databases. And we're building an efficient and effective interconnected suite of tools that deliver a stronger value proposition for customers in what is still a relatively fragmented market.

We also continue to build product capabilities in commercial real estate. I've previously talked about a product launch in the third quarter, CreditLens for commercial real estate.

And that's our SaaS workflow platform built on the latest cloud technology and tailored to the specific needs of commercial real estate lenders. In the fourth quarter, we accelerated the road map for enhancements to the platform, including the overall user experience.

We also expedited the launch of our portfolio monitoring solution for commercial real estate investors, integrating and building on the acquisition of RealX data in September, and this solution -- commercial real estate portfolio manager was recently made available to customers in North America. And last, we invested in the ongoing SaaS conversion of our banking software products, which supports growth among our existing customers and will help deepen our penetration of the midsized financial institution sector.

And we expect that this conversion will raise our recurring revenue growth rate to low double digits in 2022 and low teens in 2023. With 24% overall sales growth, including 20% increase in our organic recurring sales, we demonstrated significant traction with customers in these 3 segments.

This strong sales growth, along with our financial capacity, gave us the confidence to invest opportunistically in the fourth quarter in these areas. For the broader MA business, we're also making some foundational investments, which will support both revenue growth and operating efficiency.

In the fourth quarter, we made investments in integrating RMS, which we'll touch on shortly, as well as fine-tuning our sales capabilities to deepen customer penetration, expand cross-selling and refine our go-to-market approach. Now as you can see on this slide, our organic recurring revenue growth rate has steadily improved, and we anticipate it's going to continue to do so and contribute towards our goal of achieving total revenue growth in the low to mid-teens percent range within 5 years.

And this focus on organic recurring revenue expansion is at the core of our business strategy for MA. There are also some other drivers that underpin this medium-term outlook.

We're redoubling our focus on customer satisfaction to support our strong retention rates and help us support recurring revenue growth. Our product enhancements enable us to increase revenue per customer from cross-selling upgrades and pricing opportunities.

The continued transition to SaaS and our Enterprise Risk Solutions segment provides the opportunity for revenue uplift from existing customers as well as the opportunity to add new customers. And we're also prioritizing the development of products and solutions for existing and new customers to further tailor our solutions to their unique needs.

Now last year on our fourth quarter earnings call, we talked about the use cases that we're serving across what was at the time a $35 billion addressable market opportunity. Now we've since expanded that to $40 billion by adding RMS.

And given the demand to assess a wider range of risks, many of these markets are growing quickly, which, as you can see on the right, translated into 4 areas in MA where we generated over $100 million in organic recurring revenue with double-digit growth rates. And this leads me to our acquisition of RMS.

And though it's early in the integration process, in meeting with a number of C-suite executives at insurance and reinsurance companies, I got to tell you I'm excited about the opportunity to serve the insurance industry with a broader array of risk assessment offerings as well as leveraging RMS' world-class data and models and expertise to meet our customers' growing needs around disaster and climate risk. We have aligned and cross-trained our sales teams, and the SaaS migration is ongoing at RMS.

Most importantly, the feedback from RMS and Moody's insurance customers has been overwhelmingly positive. They're excited about us jointly providing more comprehensive offerings for both the asset and the liability side of the balance sheet, and we're identifying opportunities for new products that evaluate weather and climate risks to take to the broader Moody's customer base, particularly in commercial real estate, CMBS and banking.

To bring this to life, I want to highlight a recent example of a large P&C insurer, which has been a customer of both RMS and to a lesser extent, MA, for years. I met with them recently to talk about how we can be even more of a strategic partner for them.

And we discussed how they wanted to integrate ESG considerations into a range of processes that included underwriting, investment, regulatory compliance, scenario analysis, portfolio management. And ultimately, the breadth of our offerings and our ability to integrate them in ways that provide a more consistent view of ESG risk across the enterprise, and especially for climate change, really differentiated our offerings.

And this cross-sell was enabled by the very deep RMS relationship and combined with the broader Moody's ESG capabilities. And I think it's a great example of the kinds of conversations that we're having with many RMS and Moody's insurance customers about how we can enable a consistent view of risk to support profitable growth, lower insured losses and reduced volatility.

I'm now going to turn the call over to Mark to provide further details on Moody's fourth quarter results as well as our full year 2022 and medium-term outlook.

Thank you, Rob. In the fourth quarter, MIS revenue grew 19%, supported by a 28% increase in transaction revenue as rated issuance rose 23%.

Corporate Finance was the largest contributor to revenue, growing 20%, supported by a 21% increase in issuance. This is driven by demand for leveraged loans as issuers opportunistically refinance debt and funded M&A.

Heightened investment-grade activity also contributed to growth, while high-yield bonds declined due to a pivot to floating rate debt. Structured finance revenue registered its strongest quarter in a decade as revenue and issuance grew 66% and 148%, respectively.

Investors' search for yield and favorable market conditions, including historically tight spreads drove activity across all major structured finance asset classes. Financial institutions revenue increased 6% as issuance grew 22%, while frequent U.S.

and European bank issuers took advantage of the attractive rate and spread environment. Public project and infrastructure finance revenue declined 2% despite a 24% decrease in issuance.

Non-U.S. infrastructure finance activity was offset by lower U.S.

public finance and EMEA sub-sovereign issuance as financing needs were largely addressed in prior quarters. The MIS adjusted operating margin expanded over 500 basis points to 53.6%.

Robust business performance resulted in higher incentive compensation, which impacted the margin by approximately 200 basis points in the fourth quarter. Moving to MA.

Fourth quarter revenue grew 20% or 7% on an organic constant currency basis. RD&A revenue increased 12% as we benefited from high demand for KYC and compliance solutions as well as credit research and data feeds.

Revenue was further supported by record retention rates of 96%, level with the prior year period. ERS revenue was up 42% fueled by the acquisition of RMS with recurring revenue comprising 89% of total revenue, up from 81%.

For full year 2021, U.S. organic constant currency recurring revenue grew by 9% as we executed on our strategic shift away from onetime sales.

MA's adjusted operating margin of 14.9% reflected the impact of recent acquisitions, higher incentive compensation and the intentional pull forward and acceleration of select organic product investments into the fourth quarter. Excluding these 3 items, MA's adjusted operating margin expanded by over 100 basis points.

The increased investment in high-growth markets and product development directly supports our expectation for organic recurring revenue growth in the low double-digit percent range in 2022. This slide provides further insight into our operating expenses for both full year 2021 and our outlook for 2022 as we balance cost efficiencies with investments to accelerate future growth.

For full year 2021, operating expenses rose 13%. Of this, 7 percentage points were attributable to operational and transaction-related costs associated with acquisitions during the year.

Organic strategic investments related to product innovation and technology initiatives contributed another 5 percentage points. In addition, we invested in our employees.

Operating growth, which is primarily comprised of hiring, annual wage increases and other retention-oriented spending as well as higher incentive compensation accruals contributed to an aggregate 6 percentage point increase. This cost was directly offset through a combination of ongoing cost efficiency programs and lower severance and restructuring-related charges.

For full year 2022 we forecast expenses to increase in the low double-digit percent range, mostly attributable to acquisitions completed within the last 12 months. We expected incremental spending on organic strategic investments and operating growth, primarily related to merit and promotional increases as well as talent acquisition and retention, will be balanced through savings from lower incentive compensation accruals and ongoing expense discipline and efficiency initiatives.

2021 provided a unique opportunity to accelerate our investments in high-growth markets, including KYC, CRE, banking, ESG, emerging markets as well as technology enablement. We ultimately invested approximately $150 million to enhance our capabilities and capture new opportunities for revenue expansion across the business.

We expect to sustain this level of investment in 2022 as we execute on our long-term integrated risk assessment strategy. Finally, we also plan to invest over $50 million in 2022 on our most important asset, our people.

Our employees connect deeply to our mission to provide trusted insights and standards that help decision-makers act with confidence. And we want to attract and retain the best talent in order to achieve our growth ambitions.

Turning now to our corporate guidance for 2022. Moody's outlook for the year is based on assumptions regarding many geopolitical conditions, macroeconomic and capital market factors.

These include, but are not limited to, the effects of interest rates, inflation, foreign currency exchange rates, capital markets liquidity and activity in different sectors of the debt market as well as the impact of COVID-19 pandemic and subsequent responses by governments, regulators, businesses and individuals. The outlook also reflects assumptions regarding general economic conditions, the company's own operations and personnel as well as additional items detailed in the earnings release.

Our full year 2022 guidance incorporates the following specific macro assumptions. 2022 U.S.

and Euro area GDP will each expand by approximately 3.5% to 4.5%, and global benchmark interest rates will gradually rise with the U.S. high-yield spreads moving slightly above the historical average of approximately 500 basis points.

By year-end, the U.S. unemployment rate will decline to about 3.5% and the global high-yield default rate will gradually decrease before gradually rising to approximately 2.4%.

Global inflation is projected to decline over the course of 2022 yet remain above Central Bank targets in several countries. Our guidance also assumes foreign currency translation.

Specifically, our forecast for 2022 reflects U.S. exchange rates for the British pound of $1.35 and $1.14 for the euro.

These assumptions are subject to uncertainty, and results for the year could differ materially from our current outlook. In 2022, we expect Moody's revenue to increase in the high single-digit percent range in operating expenses, including the full year impact of acquisitions to grow in the low double-digit percent range.

Moody's adjusted operating margin is forecast to be in the range of 49% to 50%. We estimate net interest expense to be between $200 million and $220 million and the full year 2022 effective tax rate to be between 20.5% and 22.5%.

Diluted EPS and adjusted diluted EPS are projected to be in the range of $11.50 to $12 and $12.40 to $12.90, respectively. Free cash flow is forecast to be between $2.3 billion and $2.5 billion, and we plan to return at least $1.5 billion to stockholders through share repurchases, subject to available cash, market conditions M&A opportunities and other ongoing capital allocation decisions.

Included within this outlook is our intention to execute a $500 million accelerated share repurchase program in the first half of the year. For a full list of our guidance, please refer to Table 12 of our earnings release.

Turning now to our issuance outlook. We expect total MIS-rated issuance to decrease in the low single-digit percent range compared to record activity in the prior year.

However, 2022 activity is anticipated to remain well above the prior 5-year historical average of $5.1 trillion, inclusive of record issuance in 2021. We project that investment-grade activity will increase by approximately 15% following the sharp contraction in 2021.

While funding conditions for leveraged loans and high-yield bonds will remain supportive, we estimate that issuance will decline by approximately 10% and 15%, respectively. This is due to strong prior year comparables and an expected decrease in opportunistic activity, particularly in high yield as global benchmark rates rise.

We forecast a 5% increase in public project and infrastructure finance activity and that financial institution issuance will be approximately flat. After a year of robust structured finance activity, issuance is expected to decline by approximately 5%.

For 2022, we estimate 900 to 1,000 first-time mandates, which will contribute to both transaction revenue and future recurring revenue growth. We expect MIS' full year revenue to increase in the low single-digit percent range, reflecting both our strong new mandate estimate and recurring revenue base, which will offset a moderation in issuance.

We forecast MIS' adjusted operating margin to be approximately 62%, in line with the prior full year result. This is an improvement of more than 400 basis points since 2020 due to operational efficiency and expense discipline.

Turning to MA. We anticipate revenue will increase in the high teens percent range, building on strong 10% growth in organic constant currency recurring revenue in 2021.

This reflects our ongoing focus on expanding our subscription-based products and is further supported by approximately 10 percentage points attributable to previously announced acquisitions. We forecast MA's adjusted operating margin to be approximately 29%, inclusive of 150 to 200 basis point headwind from recent acquisitions and foreign exchange movements.

As Rob mentioned earlier, in response to investor feedback, we are replacing our existing long-term targets with new medium-term guidance. This demonstrates our commitment to delivering multiyear value to our stakeholders as well as our confidence in capitalizing on the growth opportunities available to us while maintaining an attractive margin profile over the next 5 years.

For MIS, we project revenue to increase in the low to mid-single-digit percent range, coupled with an adjusted operating margin in the low 60% range. as we continue to invest in meeting our customers' needs in emerging markets and evolving areas of risk, including ESG.

For MA, we are targeting revenue in the low to mid-teens percent range and an adjusted operating margin in the mid-30% range within 5 years. We expect this increase to be driven by organic investments in our products, solutions and distribution capabilities as well as operating leverage from expanding recurring revenue.

As such, over the coming 5 years, we project Moody's revenue to grow by at least 10% on an average annualized basis and adjusted operating margin to stabilize in the low 50s percent range. We also anticipate that adjusted diluted EPS will increase in the low double-digit percent range.

Before turning the call back over to Rob, I would like to highlight a few key takeaways. First, in 2021, Moody's delivered over $6 billion in revenue and an adjusted diluted EPS growth rate above 20% as our customer-centric approach continue to address their evolving needs.

Second, following a record year of issuance in 2021, we expect activity to remain robust this year. Third, MA's high recurring revenue growth and retention rates will continue to support strong financial results.

Fourth, our strategic investments in high-growth markets will strengthen our financial performance in 2022. And finally, the introduction of medium-term targets reflects our conviction in the momentum of our business as well as our commitment to capitalize on multiple opportunities for growth.

And with that, let me turn the call back over to Rob.

Thanks, Mark. And before we take questions, I again just want to recognize the efforts of all of our people at Moody's.

Our entire organization remains focused on putting our customers at the center of everything that we do. And in 2022 and beyond, we're going to continue to invest and to execute to provide our customers the solutions they want and need to manage a wider range of interconnected risk, and that will reinforce our medium-term growth opportunity.

So thanks for listening to our prepared remarks. Before we go to Q&A, I've been asked to give a brief public service announcement about our Investor Day.

We're going to be sharing some videos that spotlight various parts of Moody's leading up to the event. So stay tuned for that, and we look forward to seeing everybody on March 10.

So that concludes our prepared remarks, and Mark and I would be happy to take your questions. Operator?

Can you hear me now? Sorry about that.

A lot to unpack here, but I didn't want to let the kind of 1-year anniversary of your tenure go by without maybe giving us a little puts and takes over the last year because obviously, you've really moved the organization forward in all different types of environments. So just love to get your recap on kind of first year in office, if you would.

Yes, Kevin, thanks. That’s a great way to actually, I think, kind of kick off the call.

And when I took over as CEO a little over a year ago, we had a business that was in great shape, and it was really poised for the next chapter of growth. And I was thinking back -- actually before I got on this call, I was thinking back to it a year ago, and I talked about 3 strategic priorities at the time that I thought would really help us reinforce and accelerate growth.

And that's probably a word you'll get to hear a lot on the call today. And we've really been active executing on that over the last kind of 12 to 14 months.

And the first of those is deepening our understanding of our customers, and the reason that's so important is that our customers' needs around risk are evolving very rapidly. I mean the pandemic accelerated that.

So risks are more complex. They're more interrelated.

There's a wider range of risks that organizations are grappling with. We've talked about that.

But better understanding these needs allows us to produce new offerings that our customers value and that then translates into more revenue per customer and adding new customers in new market segments. The second is investing with intent to grow and scale.

And in 2021, we made a number of moves to enhance our offerings and our competitive position in key markets. That included insurance and climate and KYC and commercial real estate.

And really, the goal here, Kevin, is to have more comprehensive offerings, again, to be able to deepen customer penetration and to add new customers that allow us to grow faster. The third area that I talked about as a focus area was collaborating, modernizing and innovating.

And we're working together across the company to provide our customers with this more integrated and holistic view of risk. And that means enhancing the workflow platforms for our customers and connecting them in ways that add real value, but also bearing down on technology enablement across the firm to help our own people become more efficient and to be able to leverage tools from across the firm.

So Kevin, maybe just if you would allow me just, kind of looking out now into the year ahead, I think the strategy and the road map are set. We've been very clear about that for the last year.

We're now focused on activating our people and accelerating our growth. And this year, I think you're going to see us focus on a few key things that are going to contribute to delivering long-term shareholder value: exceeding our customers' expectations by better understanding their sense of value and delivering a better experience; realizing the benefits of investments, especially over the last 12 months because they've been substantial to drive industry-leading growth; building out what we call internally our risk operating system so that we can deliver differentiated integrated solutions; and then finally, making Moody's a place that people want to come and stay.

And I think as we do that, we're going to be able to really deliver for our stakeholders, our employees, our customers, our investors and our communities.

That's super, super helpful. And then just real quick, Mark.

On the buyback, it looks like you're going to be about 2x what you were in '21. Any thoughts as to what drove that decision?

Is that just capital allocation within the context of potential M&A? And just it's obviously -- you've got the cash flow and the enterprise ability to do it, but just any thoughts around that because it just really, really underscores the model.

No, Kevin. Absolutely.

So maybe let me do a little bit of contextual answer, and then I'll address the specific question. So we remain very focused on prudent capital planning and allocation.

As a management team, we first identify opportunities for organic and inorganic investments in high-growth markets, like we did in 2021 that really enrich the ecosystem of data, analytical solutions and insights that are required to serve our customers. And then after deploying those investment dollars, we seek to return capital to our stockholders through share repurchases and dividends.

And in 2022, we plan to return at least $2 billion, about 80% of our global free cash flow to our stockholders, subject to of course, available cash market conditions, et cetera. And that's going to include our expectation to repurchase at least $1.5 billion in shares including the execution of a $500 million ASR in the first half of the year as well as approximately $500 million in dividends through a quarterly dividend of $0.70 per share, which is a 13% increase from our prior quarterly dividend of 62%.

And really, finally, I think the key point here is we do remain very committed as a team to anchoring our financial leverage around a BBB+ rating, which we believe provides an optimal balance between lowering the cost of capital and elevating our financial flexibility.

I guess my first one would just be to hone in a bit more on issuance and the outlook for '22. You spoke a little bit about this in your prepared remarks, obviously.

But could you spend some time just kind of talking about the biggest swing factors that could affect issuance this year and maybe how you think about the range of potential outcomes around the 2% issuance decline figure with those factors in mind?

Yes. Sure, Andrew, happy to do that.

I talked a little bit in the prepared remarks about some ongoing tailwinds, and we've got a positive macroeconomic backdrop. We've got healthy M&A pipeline, continuing refinancing needs.

But we also -- and we've talked about this a number of times on this call, we've got a tough comp. So as we talked about, for 2022, we're looking at issuance to decline in that low single-digit percent range.

And let me talk a little bit about what goes into that and what may be some of the upside, downside. I think a real key to our outlook is around leveraged loans.

And you could see that in our guidance is that, we expect leverage loans to be off something like 10% off of what was a really strong year last year. But I would note that there is an enormous amount of private equity money that's got to get put to work.

And that's going to continue to drive leverage loan activity, and we have seen that in the month of January despite the fact that there has been some volatility, and that's impacted investment grade and high yield. Leveraged loans have continued a very robust pace.

So that for us is really something to watch when you look at the outlook. And then if -- depending on what goes on with leveraged loans, we would expect that to spill over to CLOs, certainly, like we saw last year.

And then obviously, a big wildcard, I know we're all focused on is kind of the patient trajectory of interest rate hikes. And that -- we're going to have to see how that plays out.

In terms of kind of the downside, maybe just to touch on a couple of things on our mind there. I think Omicron reminded us that COVID variants can still be a little bit of a wildcard to economic recovery and supply chain issues that are exacerbating inflation and then in turn, may have some impact on interest rates.

And I think just in general, as Central Banks are starting a tightening cycle and starting to back away from all the monetary stimulus that has been in the economy over the last several years, I think there's just, again, kind of back to the pace and how the market expects that to unfold. It produces -- I think there's a chance for an unexpected surprise, right, any time that you've got something like this going on.

And if there's an unexpected surprise, we're going to see bouts of volatility. We've seen a little bit of that already.

There wasn't much volatility in the last 2 years. It was just kind of full on.

So if we do see that, that may provide a little bit of downside.

Great. That's really helpful, particularly on leveraged loans.

I guess for my follow-up, I was just hoping you could provide an update on the ratings business in China, expectations for when that could be material. And I guess within that, how much growth in that business or in that market are you embedding in the low to mid-single-digit growth expectation for MIS over the next 5 years?

Yes, Andrew, maybe let me just talk a little bit more broadly about how we're addressing the broader Chinese credit market because I think that's how we're thinking -- really thinking about it. And the first way we're doing that is serving international investors who are investing in bonds that are issued by Chinese companies in the cross-border market.

And there, we have a very strong position through MIS, and we expect that position to continue. The second is international investors who are investing in local currency bonds issued by Chinese companies in the domestic bond market.

And we recently launched something called China CreditView. I talked about it, I think, in the last earnings call, that covers about 1,000 Chinese companies with ratings and model-derived ratings, financial statements, financial statement scores.

And we've been really pleased with the early reception to that product. We've got almost 100 active prospects from our core international investor customer base.

And they really like the access to the broad coverage and the global scale ratings. The third are domestic Chinese investors who are investing in the local currency domestic bond market.

And here, we address that, as you're probably aware, through CCXI and despite some challenges last year, they continue to be the market leader. Just to kind of put it in perspective for you, last year, they completed several thousand ratings, including both fundamental and structured finance.

So the scale of that business is quite significant. So all of this is factored into both, our outlook for both MIS but also as well as MA.

I wanted to ask about the new medium term or 5-year guidance. You're looking for revenue of low to mid-teens in MA despite having RMS, which historically was lower growth.

I know you're expecting a lot of synergies there. But just talk about sort of what has to go right versus what are the biggest risks to the medium-term guidance in MA.

Toni, good afternoon. The MA medium-term revenue outlook that we're providing this morning of low to mid-teens percentage growth really does reflect our confidence in significant opportunity we have given customers demand for our integrated risk assessment products and solutions.

We believe there are multiple pods to achieving this target, at least one of which is through continued investment in organic product development and sales distribution capacity. And it's through these organic investments, along with projected growth in our recurring revenue base that we expect total MA organic revenue to grow at the higher end of the low teens percentage range, for example, to at least $4 billion by year-end 2025.

Naturally, any incremental bolt-on M&A that accelerates or advances our capabilities and product offerings and which is hypothetically similar in size and scope to how historically completed acquisitions could elevate us to the mid-teens percentage revenue growth. And putting that in context, we also recognize that strategic success is not only about revenue growth, but also about concurrently expanding the margin.

And so we are reaffirming in the outlook that we issued today the medium term, mid-30s MA adjusted operating margin as subscription-based products provide more operating leverage and as recurring revenue comprises an increasing proportion of MA's total revenue over the medium term.

That's great. I wanted to also ask about ESG.

Last quarter, you talked about revenue for this year all-in being sort of like $26 million to $30 million. I just wanted to get an update on where that ended up.

And is 20% the right growth rate to be thinking of going forward for ESG? Or should it be higher than that?

And where are the fastest-growing areas that we should be thinking of for ESG growth?

Yes. Toni, this is Rob.

I'll probably start by just giving you some idea of kind of where we're focused this year around ESG, and then I think Mark can give you the specifics to your question. But as we look out this year, I think our goal is really to build and scale the relevance of our ESG offerings.

And that's really important. And we hear from both companies and investors that that they want us to play a meaningful role in the ESG space because they like our transparency and comparability and they trust our methodologies and our analytics and our data.

There are some keys to that. And I think you're going to see us building out coverage across the rating agency.

ESG and climate are increasingly important considerations to credit, we all know that, but also sustainable finance is becoming a core part of many issuers’ funding program. So at the end of last year, we had almost 2,000 credit impact scores, ESG credit impact scores which speak to the impact of E, S and G on an issuer's credit profile.

And these scores have got a -- they've got a transparent methodology, but also there's engagement with the issuers and our analysts. And we're going to be expanding our coverage by thousands more over the course of this year, and that's going to give us ESG credit impact scores across a much broader part of the MIS-rated portfolio that benefit from the engagement with our analysts.

We're going to be expanding to help meet the sustainable finance needs of our issuers, and you're going to see that in probably around the middle of this year where we start to expand our coverage of our second-party opinions on sustainable issuance. And then I think in the second half of the year, you're also going to see us start to build out things like our net zero and sustainability rating offering.

So that's on top of the ESG measures that cover thousands and thousands of companies with public information, but also our ESG score predictor that covers over 140 million companies that supports things like sustainable sourcing and now your counterparty needs. So that's really the focus for us this year.

And how that's going to translate into revenue, Mark, you might want to talk about that?

Absolutely. So in 2021, our actual ESG revenue was approximately $29 million, and that reflected $22 million in stand-alone ESG revenue related to our Climate Solutions Sustainable Finance in ESG research signified products.

As well as an additional 7 million from integrating how ESG-related solutions into MIS and MA products that Rob spoke about. So it's a 36% year-over-year growth.

For 2022, we are expecting to further increase our direct and attributable ESG-related revenue by another approximately 35% to $40 million. And the drivers for our estimated 2020 ESG financial performance are going to include increased demand for those climate solutions and the need to include and integrate those ESG factors into the credit analysis and investment decisions.

Just as a reminder, we do have a significant amount of climate-related revenue within RMS, which we are considering reporting perhaps later this year, together with our direct and attributable ESG-related revenue to give you a holistic picture.

I wanted to ask another one on the medium-term guidance. And sorry if this is specific and you may have answered this already, but I may have not heard it correctly.

But on the medium-term top line guide, the 10% plus and also the MA guide low to mid-teens. I think in your question just now, you referred to the recurring organic growth rate, but is that guidance actually 100% organic including recurring and nonrecurring?

Or can -- does this actually potentially include some M&A? I wasn't 100% clear.

Sure, Alex. I'll try to be as clear as I can.

So the MIS and -- sorry, the MCO medium-term target, which really includes the combined MA and MIS medium-term revenue guidance of at least an average annual 10% revenue CAGR, we see a path to achieving that organically. If I look at MA specifically, we expect the organic revenue to grow at the higher end of the low teens percentage range and that any bolt-on M&A over and above that, that accelerates our capabilities will move us into that mid-teens percentage range.

Rob, you want to spend a couple of minutes on MIS and how we're thinking about that as a medium term?

That's probably that's its own topic. I don't -- Alex, I'm happy to cover that if you'd like, but let me just pause there.

I mean sure, if you want to answer. I have another question, but go ahead.

All right. Well, I guess the other leg of this, right, is the MIS kind of a medium-term outlook.

And I guess, let me just kind of share with you how we thought about it. So for starters, I think we all understand we're at the tail end of a period of ultra-low interest rates.

We've just finished 2 years of enormous issuance and we're entering a tightening cycle. And I think that would imply some natural headwind versus issuance over the last several years, and you can see that in this year's guide for MIS.

So we've put out a range for MIS revenue growth. And consistent with this year's guide, we expect to be at the lower end of that range in the short term.

And as rates and growth expectations normalize, we'd expect to see a pickup in MIS revenue growth towards the higher end of that range such that, on average, over the 5 years, we're at low mid-single digits. And I'm happy to -- or anybody else on the call, I'm happy to build on that and what went into that outlook, but let me just pause there and see if we can get to your next question.

This next one probably dovetails and again, I may be scrutinizing here a lot in this medium-term outlook, but you obviously used to have a long-term outlook that, I guess, you're no longer going to have and it called for, I think, low teens EPS growth. So medium term, low double digits.

I guess, again, I'm just scrutinizing here a little bit because it's almost the same, but isn't this essentially a little bit of a lower growth outlook? And is that related to what you just talked about on the ratings side?

So just wanted to confirm how we should be comparing your long term with your medium-term guidance that you just laid out.

Alex, we expect to grow adjusted diluted EPS in the low double digit percent range over the medium term by balancing organic and to the extent inorganic investments with the return of capital to stockholders. The difference between our new medium-term adjusted EPS target and the prior long-term EPS guidance is primarily driven by the expectation for incremental organic strategic investment and reduced capital leverage from share repurchases based on the assumption that Moody's share price continues to increase as well as lower discrete tax benefits on a percentage basis as adjusted net income itself grows.

So Rob, I'll just follow up to the question that you just answered, and I was wondering if you could actually provide more detail around what is baked into your issuance assumption because I would have expected issuance on a more normalized basis growing more in the low to mid-single digit, plus you have pricing power, recurring revenue growth and getting more to high to -- mid- to high single digit over the next few years versus mid-single digit over the midterm. So any color on that front will be helpful on the issuance front.

You bet, Ashish. You've got the algorithm.

So let me just talk about the factors as we develop that range. And you're right, we always talk about issuance activity being highly correlated to GDP growth over the medium to long term.

But it's interesting, if you just step back and look at the last couple of years, in 2020, we had economic contraction, and we had enormous issuance. So that relationship hasn't necessarily held.

And this year, obviously, as we look forward, we've got economic growth, but our outlook for issuance is to be slightly down. And what I think we've got going on is that there is a digestion and normalization period that's going on here.

As we come out of the pandemic and this unprecedented amounts of monetary and fiscal stimulus that have driven all of this issuance, and we've had this kind of rapid economic cycles. But on average, we expect that relationship to hold.

So again, I think there's this normalization and digestion period here. But you're exactly right.

The other thing that we're looking at growth in the maturity walls given all of the debt that's been issued over the last several years, and that provides some support or kind of what I think of as like ballast for our transaction-based revenues. On the last earnings call, I think we talked about the forward 4-year refunding needs have increased something like 9% to $4 trillion for U.S.

and European issuers. There's just a lot of debt out there that's got to get refinance, and it was something like 19% for U.S.

leveraged loan maturities. So there was some pull forward, further pull forward in the fourth quarter, but I don't think it was outside of historical ranges.

So these maturity walls still imply some good support for future issuance. We've got pretty good visibility and confidence around recurring revenues, especially with all the first time issuers that have come into the market.

I think the recent strength of the leveraged loan market provides support for a view that disintermediation is still alive and well. And then, Ashish, you noted the opportunity for us to kind of support and enhance the value we deliver to our customers, things like sustainable finance that I touched on are places where we're going to be able to expand our offerings and support our value proposition and, in turn, support our pricing.

So the way I think about it, Ashish is near term, we've got some digestion and normalization, but the structural drivers to support MIS revenue growth, I mean, they're intact over the medium term. And so I would expect growth to start to kind of pick up through the medium-term horizon from that low single digit to more like that mid-single-digit.

That's very helpful color, Rob. And Mark, maybe if I can ask a question on the multiyear investment, thanks again for that slide with the detail there.

But as we think about in '22, we're going to have a total of $300 million of organic investment. How should we think about that going forward in '23 and over the midterm?

Should that come down as we go back -- go from an elevated organic investment to a more normalized investment cycle? And is that the key driver for significant margin expansion on the MA side?

Sure. In 2022, we are expecting to increase our spending on organic strategic investments to be approximately $150 million, and that's really aimed at capturing the incremental opportunities we are seeing in the market.

And that implies that our planned spend over the 2-year period is approximately $300 million. These anticipated investments are really going to be focused on increasing our sales force and go-to-market activities.

It's going to be a continuation of our 2021 strategic investment road maps in the high-priority markets, specifically KYC, CRE, banking, ESG and climate, et cetera, as well as some of the technology enablement and product development that we're focused on. I also want to just mention that in addition to this $150 million, we are expecting expenses to increase by at least $15 million as we also continue investing in our employees.

And again, our employees connect deeply to our mission as a company, and we want to make sure that we attract and retain the best talent in order to achieve our growth aspirations. As I think forward to the MA margin over the medium term, these investments to the extent that they continue to be productive and favorable will continue forward, and they will be allocated in the way that we think about the highest and best use of capital and prioritization so that we both achieve revenue growth and ongoing margin expansion, not just in 2022, but over the medium term.

I'm sorry to go back to your medium-term guidance, but I just wanted to clarify something. Can you talk broader about the capital allocation priorities that are built into this in terms of not only internal investment, but just as importantly, shareholder returns?

Absolutely. Capital allocation priorities over the medium term will follow the comments I provided earlier on the call, meaning principally focused on organic and inorganic investments back into the business.

We have not assumed any incremental inorganic investments other than those we have publicly announced to the market through and as of today's date. However, to the extent in the upcoming periods, we do have inorganic investments that continue to bring invaluable talent and additional products and solutions into our umbrella that will serve to enhance and accelerate the achievement of those medium-term targets within that 5-year window.

And I'm sorry, I was specifically focused on return of capital to shareholders. You talked about an 80% return of free cash flow this year.

Is that something that we can kind of build in going forward?

I think the way that you could think about return of capital to shareholders either through share repurchases or dividends is that we will execute that post any internal organic or -- sorry, in either internal organic or inorganic acquisition-related activity. We are focused around a BBB+ rating level, and that's because we believe that provides the best balance between return of capital to shareholders and our cost of capital.

We are not focused on a return of or percentage return of free cash flow over the medium-term period.

Okay. Great.

And if I could just follow up with one quick one. Actually, this is looking backwards at the fourth quarter.

If I specifically focus on margins within MA, I think you talked about on an annual basis what the impact was in terms of some of the investments. What was the impact on the fourth quarter?

What would margins have been without some of the investments you made?

Yes. So maybe compared to our implied fourth quarter margin from the last earnings call, we did accrue for a couple of things.

One is higher incentive compensation and commissions of about 300 basis points. We also had additional costs related to acquisitions that we announced, and that's about 200 basis points.

And then specific to your question, we pulled forward select investments from 2022 into the fourth quarter of 2021, and that's worth around 400 basis points.

And that's all in MA?

Primarily in MA, correct.

I just wanted to ask one more question about the underlying assumptions with the MIS medium-term revenue growth target of low single to mid-single-digit revenue growth. So just bear with me for a second.

So we looked back at the correlation between MIS' revenue growth and issuance growth, 2017 to 2021. On average -- just take my number.

On average, MIS revenue growth outperformed issuance by 5.6%. And so my question is when you think about that 5-year outlook, do you feel like the amount of outperformance that MIS will grow faster than issuance might be less over the next 5 years than it was in the past number of years?

And as you can understand my underlying assumption is if that's -- what's your kind of underlying issuance outlook to make for that MIS revenue outlook.

Yes. Maybe we'll tag team the answer here.

Part of it when you think about revenue outperformance of issuance, a number of things go into that, right? One of those is what we talk about, mix.

And I think broadly, we have assumed a generally consistent mix with what we've seen over the last several years. That mix has generally been favorable.

But then a number of other things go into that, that allow us to typically kind of exceed issuance growth. Remember, I don't know, 1/3 to 40% of the business is recurring, and that continues to grow.

Then we've got pricing. We've got new issuers through disintermediation, so those are the kind of building blocks.

And Rob, maybe I'd only add to that, at least in the near term, within this 5-year period, you could think about elevated cash balances and leverage may constrain some of that more opportunistic issuance in the near term. And that will more normalize over time to Rob's point earlier, around digestion and normalization.

Rob, maybe we start with the RMS acquisition you guys closed on in September. Talk about the -- what I think is a big opportunity long term as you guys move that business and branch away from just serving the insurance market there and talk about the upside there long-term, please, for starters.

Craig, sorry, I had it on mute. We share the same view, as part of the attraction is that the we see 2 opportunities here, building out a great comprehensive, more comprehensive insurance business, but also taking these kind of weather and climate and disaster capabilities to a broader -- our broader customer base.

So to give you a sense of that, it's interesting, when we go out and talk to banks and asset managers, some of them are out actually -- trying to hire folks with climate expertise, and it's difficult. These are scarce resources and that's one thing that attracted us to RMS is it's got world-class expertise at scale.

And that is just really difficult to get. But what we hear from when we go out beyond insurance customers, we hear, how is climate risk going to affect my portfolio?

And how material are the effects? That's part of what we're hearing.

And so we see opportunities around commercial real estate to be able to integrate that into the analytics, commercial mortgage-backed security analytics. We've had some interesting conversations with residential mortgage lenders who want to understand the degree of, for instance, uninsured flood risk beyond what's covered by FEMA.

We've got banks who are having to do climate stress testing and need to have more sophisticated tools around that. You've got governments who are now needing to try to understand the vulnerability of their communities to climate change and then start to think about the kinds of risk mitigation investments that they're going to make.

And I think with the infrastructure bill, some of that, we're going to see investments in building climate resilience, but you need the data and the tools to be able to assess, are these worthwhile investments and what impact are they going to have on mitigating the financial loss relating to climate change. So Craig, we're now in the process.

We sat down with our teams. We've looked at what we think are the most interesting opportunities around this and are starting to work to develop products and also going on and talking with our customers beyond insurance to understand what do you want and how can we provide it?

And Craig, if I were to put just a few numbers around that related to RMS, for 2022, particular, we are expecting revenue growth in the mid-single-digit percent range. And that would be in line with our transaction model, inclusive of some of the emerging synergies that Rob spoke about.

And then on a full year basis from 2022 to 2023 excluding any impact of the 2022 deferred revenue haircut, we expect RMS revenue to grow in the high single-digit percent range.

That's helpful. And I also want to ask you guys, the medium-term guidance -- sorry to go back to this again, I think most people would be very you guys could put up at least 10% revenue growth here.

You're talking about margins in the low 50s here, you're basically there right now. Is it just being conservative on the margin when you guys talk about the margins that you really have to grow cost that much -- the margins aren't going to move up over the medium term here?

And then also, Mark, my housekeeping question I want to ask, incentive comp in the quarter, what was that? And also transaction costs, you talked about in the press release, but it wasn't quantified.

Was that material?

Craig, sure. Let me start with your -- the first question.

So we're not looking necessarily to provide more specific time lines for achieving our guidance within the next 5 years for each of the medium-term metrics that we provided this morning. However, some targets will likely be achieved intuitively earlier than others.

For example, the outlook for the 2022 MIS adjusted operating margin is 62% and is within our medium-term guidance range. So there, you could think about our primary objective is really to maintain or modestly expand MIS' adjusted operating margin within that low 60s range while preferring to reinvest to drive growth, add value and scale over time.

Similarly, as the relative proportion or size of the MA business grows relative to MIS, you'll begin to see that influence the timing of the emergence of the MCO margin into that low 50s percent range. On your other question, in terms of incentive compensation for the quarter, that was $117 million.

And for 2022, we expect incentive compensation to be approximately $75 million per quarter or around $300 million for the full year. And just to note there, RMS would contribute roughly $7 million per quarter of that number.

And then I think your final question was on deal or transaction-related expenses, for the full year 2021, we had around a $0.16 cost or around $40 million from M&A transaction and deal-related expenses, and that would include the cost of the RMS purchase price hedge loss.

What was that number in the fourth quarter, Mark?

The full year was [indiscernible] million. Fourth quarter specifically was $5 million for M&A deal and transaction costs.

Could you please talk about your investments in the SaaS solutions to banking customers? Are you going to provide more like the software solutions or you're migrating your like existing data solutions to the cloud or changing your contracts to be more recurring?

Any more color would be helpful on the SaaS front.

Owen, it's Rob. So one of the things that we're doing is we're in the process of converting some of our customers from kind of legacy on-prem solutions that we provide to them to our new SaaS-based solutions.

And so we talked a little bit about what's going on there in terms of that conversion. But that does a couple of things for us.

One, it -- these SaaS solutions give us an opportunity to get a little more revenue uplift, but it also helps with our penetration and our ability to integrate our offerings. So if you kind of think about what we've got across kind of the banking and ERS, we're building out an ecosystem that helps support banks around origination, risk, finance and planning.

And so rather than kind of a collection of kind of legacy on-prem, what we're trying to do is build out a connected SaaS-based ecosystem that's going to allow us to connect this better and to be able to help our customers kind of work across their departments, and that's what we hear from them all the time. So that's really what's behind that strategy.

Got it. And then another housekeeping question, I want to go back to the MA margin in 2022, 29%, up from 26% in 2021.

Could you please help us think about the trajectory of these margin expansion in each quarter? Should we expect a gradual expansion each quarter and you can potentially exit 2022 with over 29% margin?

Or do you expect the margin to be like stable at around 29% each quarter in 2022?

When I think about 2022, the MA adjusted operating margin guidance that we announced today of 29%, that includes 150 to 200 basis points of margin compression from recent acquisitions and movements in foreign exchange rates. And in addition to our multiyear initiatives in high-growth markets, we are targeting investments to bolster our best-in-class sales force and to focus on cross-selling opportunities across multiple product lines.

For 2021, as I think about sort of run rate here, and I think here's the key point that you're driving at, our full year guidance anticipates in the first quarter of 2022, expenses to be about $120 million to $140 million lower than the fourth quarter. And that's primarily due to the reset of our incentive compensation accruals as well as lower levels of organic investments given, we accelerated some of that investment spending into that fourth quarter.

And if I think about now just within 2022, annual merit increases, I would say, as well as talent acquisition and ongoing organic investments, they'll contribute to an expense ramp during the year of somewhere between $80 million to $100 million. So if you -- Q1 2022, it's $120 million to $140 million lower than Q4, which, of course, will support margin and then think about during the year is $80 million to $100 million -- $80 million to $100 million of expense ramp.

Mark, I guess I was hoping you could just expand on that kind of seasonality topic and just talk about some of the other moving pieces in the first quarter and as we move to the rest of the year because I guess we just don't want to get carreed away putting the full year guidance into 1Q run rate here.

We considered historical issuance seasonality patterns as we developed our 2022 forecast. For MIS, we anticipate that transaction revenue will be stronger in the first half vis-a-vis the second half of the year as issuers take advantage of favorable market conditions and secure funding ahead of potential headwinds from interest rate and inflation uncertainties.

And this is similar to the market dynamics that existed in 2020 and 2021 where 59% and I think 56% of total full year issuance was completed in the first half, respectively. For MA, revenue is highly recurring, and it's expected to progressively year, and that's comparable to the actual 2020 and 2021 results, which had just under 50% of total full year revenue reported in the first half.

In thinking about expenses, to my comments a moment ago, we expect an increase in spending from the first quarter to the fourth quarter in the range of $80 million to $100 million and as I mentioned a moment ago, driven in part by the timing of annual merit and promotion increases as well as ongoing organic investment activity. And then I would like to probably end here with we are expecting the full year 2020 strategic investment spending of $150 million will be more weighted towards the second half of the year.

Got it. All right.

And Rob, maybe if I can just ask in M&A pipeline, outlook, appetite, just your thoughts here, is RMS just a lot to digest before you do anything more significant?

Manav, we had a pretty busy 12 months. We are very focused, as I said, on realizing the benefit of those investments.

And we're excited about the opportunity with RMS that there's a lot of work to do, and we need to make sure we're executing on that. I would also note, Manav, we bought 3 small businesses in the KYC space just in the fourth quarter.

And that was part of this investment that was going on in the fourth quarter and accelerating the integration, so we could accelerate our speed to market with this workflow solution from a company called PassFort. So I guess what I would say, Manav, is we're feeling pretty good because we have invested a lot in building out our capabilities in some areas that we think are very important.

You know that we're always out there. We have a great corporate development team.

But we feel like we've really enhanced our capabilities. We've added our customers added customers in new areas, and we're really focused on executing this year to realize the benefit of that.

Rob, maybe you could talk a little bit about -- I'm going to go back to the medium-term guidance that seems to be the main topic of the call here. Just the top line growth is the expectation to get at least 10%.

And it seems like that's really an organic growth number, it sounds like from the answer to all the various questions. That's definitely an improvement over what the company was pointing to historically in its trajectory.

And maybe you could talk about like what's changed that gives you confidence that you'll be able to do that versus what you had done in the past or what you were driving towards in the past? Is it a matter of some of the acquisitions you've made and some of the products you've made, some of the sales force?

Just maybe there's a little bit of a bridging you can do in order to kind of help us understand why the expectation is higher for organic growth at this point? And then I'll have a follow-up.

Yes. Thanks, Shlomo.

So first of all, I just -- I think we see a path and have confidence that we can But as Mark said, there may also be some M&A along the way. But we feel good about it.

And the reason why, I'd say 2 things. One, we're in markets that are growing.

I mean if you look at the current addressable market that we talk about, a number of just the underlying markets are growing nicely, right? So I think of that as we live in an attractive neighborhood.

And obviously, we, as a team and as a company, are trying to focus our investments on the most attractive parts of that broader addressable market. But second, we've been investing heavily.

It's been a theme on this call, to build out the capabilities. And it's been through some of the acquisitions, where we think now we've got world-class capabilities around climate at scale.

We have got a -- what we believe is a very strong platform for KYC and financial crime compliance. And it's no longer just our data, but now we have a workflow platform that we're integrating into.

And that's really -- that's an important need for our customers in the market. We're investing in our commercial real estate business.

We invested specifically in the fourth quarter to accelerate some of our product launches into -- that will give us some growth into 2022 and beyond. So I guess we feel good about the growth prospects of the markets we're serving, and we feel good about the capabilities that we have been building and acquiring and integrating to be able to capitalize on those growth opportunities.

Okay. Great.

And then just kind of piggybacking off of a question that Manav asked. Could you say that the busy 2021 M&A engagements that you had -- would you consider that kind of an anomaly or something that the company is positioned to, hey, we're positioned to repeat something like that, that might become more frequent.

I mean, the comment you made it seems like you want to digest some of the big bites that you made. But I just wanted to ask you, do you feel like you're positioned differently than you were in the past in terms of doing a larger kind of M&A program kind of that would enhance the already improved organic revenue growth that you've laid out.

I guess I would say 2 things. One, we knew where we wanted to invest based on the strategy and the market opportunity and where we thought we have a real right to win in the market.

And we have what we call internally these business blueprints that we use to figure out what do we need to do both from a organic investment standpoint but also from an acquisition standpoint. And so we felt like it was important to build out those capabilities to accelerate the build-out of those capabilities and the acquisition of those capabilities because we feel that speed to market in some of these markets that we serve is really important.

You've heard me talk about that, KYC, that market is growing. And you see we're growing that, depending on the time period, mid-20s or more.

What that means is you've got a lot of customers who are adopting new solutions and the retention rates are high. And so we want to be able to get those customers onto our platforms.

I think the same is going to be true with climate. As we think about the need, as Craig asked about, isn't there a great opportunity beyond insurance?

Yes, there is. But we've got to have the capabilities to be able to meet that need quickly.

So I think there was an element of wanting to really enhance our speed to market. And it was an active year.

There was a lot out there. We know that there were a lot of opportunities that were also out in the market.

So I don't know if it's an anomaly. We don't have a quota.

We have plans on how we want to drive growth, and we're going to continue to execute on these plans.

Historically, pricing has contributed 3% to 4% to overall revenue growth. How do you expect pricing trends to evolve compared to historical levels given rising inflation?

And what kind of increases are you seeing in labor costs especially in the more labor-intensive MIS segment?

George, it's Rob. So I think our view is that they probably have a consistent pricing opportunity.

I guess you might be able to argue, well, isn't there more upside with inflation. I think we just have a long-term view on pricing in the rating agency and MA, I mean, all across the firm.

We want to be prudent and thoughtful about price. Price is obviously important to our customers as well.

So what it's really about -- and we get questions about this in the rating agency -- it's about making sure that we are reinforcing the value proposition that we deliver to our customers. And I think an important part of that for MIS going forward is going to be around sustainable finance.

I mean we hear from our customers all the time. It's I've got a sustainable finance program, and I want Moody's to be able to help me with credit rating, my second-party opinion, various aspects of that.

We're also integrating all that into our research for the investors and our issuers' fixed income issuance. So that's how we think about supporting that value proposition.

And I think, again, we're taking a long-term view. In terms of labor costs, Mark touched on it.

Look, we're investing in our people, and I'm sure you've heard this on a number of calls of companies that you cover, we're no different. We're investing to make sure that our compensation increases are competitive with the market, but also making sure that we are retaining the key talent that we need to drive the company forward.

And you can imagine there are certain types of skills that are in high demand. We're very focused on making sure that we can attract and retain that kind of talent.

Got it. That's helpful.

You've made a lot of investments in MA in the KYC market recently. If you look forward, what areas do you want to focus on in the MA segment from an M&A perspective.

Across MA, so I guess -- so George, you're right, we have made several investments in KYC. It's a pretty fragmented market.

We're building out our capabilities. We acquired some capabilities, and we're integrating those.

There may be other opportunities. I mean, I think one thing that you hear from us as a management team is we're trying to invest in high-growth opportunities where we think we're well positioned to win in the market.

KYC is one of those. So yes, we have made some investments, but I think you'll see us continue to make investments -- organic, it may be inorganic, if it's on our business blueprint.

And so we've been pretty clear about where we want to continue to build scale across the business. Where we see very strong growth, it's KYC, it's insurance and banking, it's commercial real estate and then ESG and climate.

Christian, this may be one of those, you're on-mute moments from the last 2 years of Zoom.

Not to beat a dead horse here. But on the 2022 outlook, if I look at sort of Slide 22, I see lower issuance.

I see what should be a negative mix shift given high-yield and structured typically have better revenue yields, and those are going down, but you seem very confident in your revenue growth outlook for '22. Just curious, what's the delta?

Is that way to think about what the delta is? If you have lower issuance and lower negative mix shift, what's the delta to revenue growth?

Is it pricing? Is it new folks coming on board?

I'll be curious how you think about that.

Christian, the outlook for 2022 includes both an expectation of a similar, though not as favorable infrequent issuer mix going into certainly the first half of the year. You could typically think about us as making slightly more on the high-yield and leveraged loans just on a per dollar basis, but equally important, leverage loans serve as a funnel for structured finance CLO creation, which provides further opportunities for the upside.

Yes. And Christian, we missed part of your question, but I think we get the question.

And if you think about where we are from an issuance outlook perspective and then kind of where we get to from a revenue growth perspective, I'm going to go back to those building blocks. So let's start with somewhere between 1/3 to 40% depending on transaction revenue is recurring revenue.

And that recurring revenue is growing, and that's supported by the north of 1,100 first-time issuers that came into the portfolio last year. Then we've got pricing -- and there is an element of mix.

But if you kind of look at where we are from an issuance outlook to a revenue growth outlook, that's probably a little more modest spread actually than maybe in some prior years or in some prior periods. And that probably reflects a little bit of what you're talking about in terms of the mix?

Okay. Maybe switching gears to MA here.

If I look at Slide 11 and 13, you guys tend to talk about the MA business in terms of the end markets, like what's driving growth from an end market perspective, but it's not the way you tend to disclose the data. So just curious, are there any plans here to maybe give us more data that helps understand end market growth, just to better understand sort of what's driving growth and a potentially better model sort of long term, how this business evolves?

Christian, I'll take this maybe from a slightly different perspective. So in addition to the medium-term targets that we announced today, in 2022, we intend to refresh the line of business reporting breakout for MA revenue to address some of the investor feedback that we've heard and the comments that you've just made around the need for greater insight into the business' performance.

This is going to be a topic we'll plan to cover as part of Investor Day materials. But at a high level, the lines of business we're considering adopting for MA include data and information, research and insights and a decision solution subsegment.

And you could think about data and information as being comprised of the vast and unmatched data sets that we have on economies, companies, commercial properties and financial securities. You could think about research and insights as providing customers with market-leading modeling and risk scoring as well as expert insights and commentary.

And then decision solutions then is combining those components from our data and information and research and insights lines of business for the purpose of integrating those capabilities through software and workflow solutions. So again, a topic we plan to cover at Investor Day once you finalize approach, but certainly something we're thinking about.

Yes. And Christian, one other thing to add, I think we'll be able to give you some insights into how we think about the growth in those underlying markets that we serve at Investor Day.

So I think that's going to guarantee that you're going to be attending.

Yes, if I can throw my two cents in here. I appreciate that was you talked about disclosing it.

It would also be helpful just to get consistent look at the end markets as well because that's how you talk about addressable markets, that's how you talk about growth. And it just feels like that's it's an easier way, at least for us to think about the business, what's KYC growing, what's the revenue today, how it's growing, et cetera.

So just my two cents in terms of as you think about disclosures.

Yes. That's great feedback, Christian.

Well, thank you, everybody, for joining today's call, and we look forward to speaking with you at Investor Day on March 10. And with that, I think, we'll bring the call to a close.