The combined company will become one of the largest raters of mortgage-backed securities
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Morningstar Credit Ratings has announced that it will acquire DBRS, the world’s fourth-largest credit ratings agency, in a $669 million deal. The combined company will become one of the world’s largest ratings agencies for US mortgage bonds.
“The chance to empower investors with the independent research and opinions they need across a multitude of securities first drove our decision to enter the credit ratings business,” said Kunal Kapoor, CEO of Morningstar. “DBRS and Morningstar share research-centric cultures committed to rigor and independence. Together, we believe we can elevate the industry with the world’s first fintech ratings agency backed by state-of-the-art models, modern technology, and expert research teams that issuers and investors can count on to deliver transparent and independent ratings.”
DBRS rates more than 2,400 issuer families and 50,000 securities worldwide, according to Morningstar. The company reported $167 million in revenue for the fiscal year ended Nov. 30.
“DBRS’s more than 40 years of experience and success coupled with Morningstar’s proven capabilities will offer an even stronger global alternative to larger ratings agencies,” said Stephen Joynt, DBRS CEO. “Both DBRS and Morningstar are driven by similar core values that aim to bring more clarity, diversity, transparency, and responsiveness to the ratings process, which makes Morningstar a perfect fit for us.”
Morningstar first began publishing credit ratings on public companies in 2009. In 2010, the company acquired Realpoint, a rating organization with a specialty in commercial mortgage-backed securities. The company has since expanded its ratings activities to include residential mortgage-backed securities, agency risk transfers, single-family rentals and more.
The acquisition is expected to close in the third quarter.
