In this Australian Investors Podcast episode, host Owen Rask is joined by Ryan Joyce, Deputy Portfolio Manager at Magellan Investment Partners, for a deep dive into S&P Global Inc (NYSE: SPGI).
S&P Global is one of those companies investors interact with constantly, often without realising it. If you follow the S&P 500, compare an Australian fund to the S&P/ASX 200, look at a company’s credit rating, use financial data through S&P Global Market Intelligence, or rely on commodity pricing benchmarks, you have probably touched part of S&P Global’s ecosystem.
Ryan describes S&P Global as a collection of data, ratings, index and benchmark businesses. But the big idea of this episode is simpler: S&P Global is one of the most embedded businesses in global financial markets.
As Ryan puts it:
“I really think of it as a benchmark business, particularly for the crown jewels in it.”
In this episode, Owen and Ryan explore:
- How S&P Global actually makes money
- Why credit ratings and index benchmarks are so hard to disrupt
- How S&P Global compares to Moody’s, MSCI, Fitch, Bloomberg and FactSet
- Whether AI is a threat or opportunity for S&P Global Market Intelligence
- Why SPGI’s valuation became attractive to Magellan
- How S&P Global fits inside the Magellan Global Opportunities Fund
- Why private markets may be an opportunity, not an existential threat
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S&P Global (SPGI) overview
Ryan breaks the company into four core areas:
“There’s really four segments. There’s the credit ratings business. It’s around 45% of its profits, very high margin, very good business. You’ve got the indices business. This is the one our listeners probably have heard the most about. It co owns the ASX two hundred or the S and P ASX two hundred as well as the S and P five hundred. It’s got an energy business where it helps doing pricing reference data. And then a market intelligence business…”
That mix matters because S&P Global sits in the plumbing of global capital markets.
Its credit ratings help companies issue debt. Its indices underpin trillions of dollars in passive investing. Its commodity benchmarks help price physical markets like oil and agricultural commodities. Its Market Intelligence products serve analysts, bankers, fund managers and corporates.
Ryan’s framing is that the market may have become too focused on the messier, more debated parts of S&P Global, particularly Market Intelligence, while underappreciating the value of the ratings and indices “crown jewels”.
Ryan Joyce
Ryan Joyce has been at Magellan Investment Partners since 2012. In 2025, Ryan was appointed Deputy Portfolio Manager, building on his role as Sector Head Financials & Technology. During his time at Magellan, Ryan has also covered consumer, industrial and infrastructure companies and spent two years in Magellan’s New York office from 2015 to 2016.
Prior to Magellan, Ryan spent two years as a civil engineer. Ryan is a CFA Charterholder and holds a Bachelor of Engineering (First Class Honours) from the University of Queensland and a Graduate Certificate in Commerce. Ryan is also a member of Magellan’s Investment Committee.
In this episode, Ryan brings the Magellan quality-growth lens to S&P Global, explaining why the business became attractive after a sell-off, what could go wrong, and why the ratings and indices businesses remain the core of the investment case.
SPGI key talking points
The business model: how S&P Global makes money
Ryan explains that S&P Global has a mix of recurring subscription revenue and more transactional revenue linked to market activity.
The ratings business earns money when companies issue debt and want that debt rated. The company issuing the debt pays S&P Global for the rating, and S&P may also earn ongoing surveillance fees.
“Generally, when you’re coming to market, if you want their rating, the company is the one paying for that rating.”
The indices business earns licensing fees from fund managers, ETF issuers and institutions that use benchmarks like the S&P 500 or S&P/ASX 200.
“If they wanna say this is a passive ETF or non ETF, it doesn’t really matter, of the ASX 200 or the S and P 500, they’ll pay a licensing fee to replicate that index.”
What makes this especially attractive is the scalability.
“It’s very high incremental margins. They’ve scaled over a long time. It doesn’t necessarily take a lot more investment or OpEx on their part. So these businesses have 60% to 70% operating margins.”
That is the heart of the S&P Global investment case: small fees attached to enormous pools of financial activity, with strong incremental margins and deep industry embedding.
Ryan adds:
“It grows with the financial ecosystem and generates attractive incremental margins along the way.”
The moat: why S&P Global is so hard to disrupt
Ryan’s core point is that S&P Global’s best businesses are built on trusted benchmarks.
“I think it’s really about network effects of having a benchmark that everyone needs to compare to.”
For ratings and indices, the value is not simply in the formula, the data or the analysts. The value comes from market-wide acceptance.
“If we think about their best businesses, which I think are the ratings business and the indices business, it’s this is a trusted benchmark that then the financial ecosystem works around.”
And this is one of the most important quotes in the episode:
“What they’re doing isn’t the most difficult thing to do. They don’t need to be the most cost effective people at doing it, but being that benchmark, being that standard is very valuable.”
That is why S&P Global can maintain its position even when parts of the product appear, from the outside, to be replicable.
A market-cap weighted index may seem simple. A credit rating may look like an opinion. But once the financial system is built around those benchmarks, switching becomes difficult, costly and risky.
Competitors: Moody’s, MSCI, Fitch, Bloomberg and FactSet
Ryan walks through the competitive landscape business by business.
In credit ratings, S&P Global’s key competitor is Moody’s, with Fitch as a clear third player.
Ryan explains why the market structure has remained so concentrated:
“Most debt is dual rated. So S and P and Moody’s are about the same size because they rate a lot of the same stuff as each other.”
The third rating is often less valuable.
“Then you get to the third player, and it kind of changes. Like, is there a real benefit to having that third ratings agency on the ticket? It doesn’t really bring down the cost anymore. The buyers seem to think two is enough.”
In indices, Ryan points to MSCI and FTSE Russell as major competitors, but notes that the competition is often segmented by geography and use case.
“MSCI is more of the world indices. FTSE Russell is a bit more Europe… S and P, various US, ASX, very Australian.”
The bigger competitive pressure may actually come from large customers such as Vanguard, BlackRock and State Street, which have the scale to push down index licensing fees.
Ryan says that fee pressure has existed, but the shift from active to passive has outweighed it.
“Fortunately, given the shift to passive, that’s outweighing that.”
In Market Intelligence, the competition is more intense. Ryan names Bloomberg, FactSet and AlphaSense as competitors, particularly in desktop financial data.
“They’re competing with Bloomberg or FactSet or AlphaSense, some of these providers. And that is quite competitive.”
That competitive pressure is why Market Intelligence is the most debated part of S&P Global.
Market Intelligence and AI disruption
One of the most interesting sections of the episode is Ryan’s discussion of AI.
At first glance, AI could look like a major threat to financial data providers. If analysts can ask ChatGPT, Claude or other AI tools to summarise transcripts, broker notes, filings and financial data, do they still need S&P Global Market Intelligence, FactSet or Bloomberg?
Ryan’s view is more nuanced.
“It doesn’t need to be one. It doesn’t need to be an either or. You can have both.”
He says vertical specialist software still has a role, especially where users need trusted, verified and workflow-ready data.
“If you wanna have all your transcripts, all the broker notes, all the expert calls sitting in your terminal ready. You haven’t had to download them. You wanna query them. They can provide that. They can show you the chart that’s on verified accurate data.”
That “verified accurate data” point is central. AI models may be powerful, but professional investors, analysts, banks and institutions need information they can trust.
Ryan adds that S&P Global and peers need to execute well:
“Make sure you’re putting your best foot forward in terms of integrating AI into that platform, making yourself easy to do business with.”
This is where the bull case becomes interesting. Rather than AI simply destroying data providers, AI may make trusted data more valuable.
Growth prospects: ratings, indices, passive investing and private markets
Ryan highlights several areas of growth for S&P Global.
First, the ratings business grows with debt issuance and the overall stock of debt outstanding. It is cyclical, but structurally important.
Second, the indices business benefits from the long-term shift toward passive investing and ETFs.
Third, private markets may become an opportunity rather than a threat.
Owen raises the concern that if more capital moves into private markets, public market benchmarks could become less relevant. Ryan responds that private markets create their own need for benchmarks, ratings, governance and pricing.
“The bigger private markets get, the more demand there is for governance and benchmarks and measuring and all the things that S and P does.”
He gives the example of private credit, where investors increasingly want to understand what is inside portfolios.
“In the private credit space, we’re seeing the big players in there ask for more ratings because their customers wanna have an idea of what’s in these portfolios.”
Ryan also notes the rise of private market benchmarking.
“You probably also wanna benchmark those managers. Who are my best performing managers? Who am I not performing so well managers?”
For investors worried that S&P Global could become less relevant over time, this part of the episode is essential. Ryan’s view is that private markets may expand the need for S&P Global-style intelligence.
“It’s pretty nascent there, but I’d say that’s an opportunity for them to play into that space.”
SPGI valuation: why Magellan became interested
Ryan says Magellan began with a small position in S&P Global and increased it after the share price sold off.
“A small position in late twenty twenty five and then increased that after we had the SaaSpocalypse. You might recall in February, S and P sold off and we viewed it as even more attractive at that point, so I added to the position.”
The valuation argument comes down to market perception.
S&P Global’s ratings and indices businesses are high-quality, faster-growing and more defensible. But the market has been applying a discount because Market Intelligence is more opaque and potentially exposed to AI disruption.
Ryan explains:
“The opportunity we saw here was that you’ve still got the ratings business, you’ve got the indices business, these are 65%, 70% of the EBIT of the business. They’re growing faster, so they’re probably 85% of the value of the business.”
The market’s concern about Market Intelligence has weighed on the overall multiple.
“It’s created a big gap in the multiple of forward earnings versus an MSCI or a Moody’s…”
Ryan’s view is that S&P Global may be over-penalised.
“We think it’s getting a discount on it because of its opaqueness.”
And one of the most important valuation quotes from the episode:
“If we back it out, if we say the ratings businesses should be similarly valued to Moody’s, the indices similarly valued to MSCI, we’d say you’re probably getting the rest of the business, including energy at less than 10 times forward earnings.”
That is the heart of Magellan’s opportunity: own the crown jewels, while the market worries about the messy part.
Risks: cyclicality, reputation, pricing and management
Ryan is clear that S&P Global is not risk-free.
The ratings business is exposed to credit markets and debt issuance. The indices business is exposed to market levels and asset flows. Market Intelligence faces genuine competitive and AI-related questions.
Ryan says:
“It is a cyclical business. It does have exposure to equity capital markets and debt capital markets, so it will go through cycles with them.”
He also flags reputation as a key risk for a benchmark business.
“We do think reputation is one of the biggest risks for this business. If you tarnish that reputation of yourself as the benchmark, that can unwind that moat.”
Another risk is pricing. If a company with strong market power pushes customers too far, it can invite competition, regulatory pressure or customer workarounds.
Ryan says investors should watch whether S&P Global is being too aggressive:
“I think that’s how you kill the golden goose here. You go out, you stretch for financial targets, you take too much pricing, you get on the wrong side of regulators, the wrong side of customers…”
Management and capital allocation also matter. Ryan is critical of the IHS Markit acquisition, describing it as a deal that took years of management attention and did not obviously create enough value.
However, Ryan is more positive on current CEO Martina Cheung’s approach to simplifying the portfolio and reshaping the business.
“We like her approach to capital allocation or what she’s signalled going forward, which is much more about a gentle reshaping of the portfolio.”
9 reasons Magellan holds S&P Global
The conclusion from Ryan is that S&P Global combines several features Magellan looks for:
- Trusted global benchmarks
- Strong network effects
- High margins
- Capital-light economics
- Strong free cash flow generation
- Valuable ratings and indices franchises
- Long-term exposure to global financial activity
- A valuation discount caused by debate around Market Intelligence
- Optionality from private markets, AI and data demand
Ryan summarises S&P Global’s cash generation:
“One of the key things we like about S and P is that strong free cash flow generation. So it’s very capital light business, around 100% free cash flow generation.”
He also says dividends and buybacks are part of the capital return story:
“Dividends and buybacks are a big part of the kind of capital returns here.”
Inside Magellan’s portfolio, Ryan says S&P Global sits in the more cyclical bucket, alongside other businesses with exposure to economic activity and markets.
“It does sit in that more cyclical bucket and so it kinda competes for a position amongst those sort of names.”
But Magellan’s thesis appears to be that the best parts of S&P Global are so valuable that the current market debate creates an opportunity.
“We like, obviously, those quality businesses that are the main driver.”
Topics covered
Topics covered
- S&P Global’s business model and why it matters to investors
- The history of S&P Global, from railroads to financial benchmarks
- How S&P Global makes money from ratings, indices, ETFs and data
- The strength of S&P Global’s moat, including reputation, trust and network effects
- Competition across ratings, indices and market intelligence, including Moody’s, MSCI, Bloomberg and FactSet
- AI, private markets and other long-term opportunities or threats for S&P Global
- Ryan Joyce’s bull case for SPGI and how it fits inside Magellan’s portfolio
Best quotes from Ryan Joyce
“I really think of it as a benchmark business, particularly for the crown jewels in it.”
“It’s very high incremental margins. They’ve scaled over a long time.”
“I think it’s really about network effects of having a benchmark that everyone needs to compare to.”
“What they’re doing isn’t the most difficult thing to do… but being that benchmark, being that standard is very valuable.”
“It doesn’t need to be one. It doesn’t need to be an either or. You can have both.”
“We think it’s getting a discount on it because of its opaqueness.”
“The bigger private markets get, the more demand there is for governance and benchmarks and measuring and all the things that S and P does.”
“One of the key things we like about S and P is that strong free cash flow generation.”
