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Morningstar’s credit analysts use a consistent approach built on four core quantitative and qualitative metrics. 

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and believe we’ve built a strong base for our independent credit research and ratings business. We now have close to full coverage of the major U.S. corporate debt issuers. 

We’ve received a strong response to our credit research. We signed our first agreement with a major brokerage firm, giving its 18,000 financial advisors access to our credit research and ratings. 

This initiative leverages the work of our more than 100 equity analysts around the world, who create detailed discounted cash flow models for each company they cover. They also rate a company’s economic moat, or sustainable competitive advantage. This modeling and moat analysis underpin our analysis of a company’s ability to pay off its debt and give us a unique credit perspective. Morningstar’s credit service includes our monthly Best Ideas, weekly Credit Update, and detailed credit research reports. 

We’re using this research not only to grade a company’s credit, but also as a source of fixed-income investment ideas. As demographic changes spur demand for fixed-income products, increasing our research coverage makes sense. It also lets us provide a holistic investment view on a company. Because we rate both its equity and debt, we can offer an opinion on which is more attractive. That’s something few of our competitors are doing. 

Morningstar’s equity research continues to gain traction. As sell-side research coverage declines, independent research helps fill the void for money managers. Clients like our methodology and access to our analysts. Because we’re not an investment banking or brokerage firm, our independent model offers unbiased research opinions. We doubled the number of buy-side institutional clients in 2010. Although we haven’t replaced the $22 million in Global Analyst Research Settlement revenue yet, we’re on a nice trajectory to get there. 

