Senior Advisor, S&P Global Inc
S&P Global CEO: Monetizing Data | Mad Money | CNBC
With the economy roaring again, companies that evaluate investment risks are back in style on Wall Street. Few are as reputable as S&P Global, so don’t miss Jim Cramer’s interview with the CEO.
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About Douglas Peterson
Douglas Peterson, Senior Advisor at S&P Global, has discussed the company's strategic decisions and market observations in recent appearances. In a 2024 interview, Peterson reflected on the 2022 acquisition of IHS Markit for $44 billion, stating that the decision was based on both financial and managerial capacity. He said, "Now's the time to strike," and emphasized the importance of culture in the merger, noting that "when you have two large organizations that are this big coming together, if you don't put that front and center, it's not going to happen." He also described the challenge of executing the deal during COVID, including renting a wedding venue for management meetings with social distancing. In a 2018 interview, Peterson discussed S&P Global's business model, saying the company has "been in the data business for over 150 years and we know how to monetize data." He identified alternative data and ESG as growing themes, and noted the shift from bank markets to capital markets globally. Regarding China, he said the country "needs a yield curve, they need a credit risk curve" and that S&P Global has been "building relationships there." He also described post-2008 enhancements to credit analysis, including cross-team collaboration to identify credit indicators and bubbles.
Transcript (9 segments)
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Jim Cramer0:11
Have to expect bond yields will keep moving hard, which again is what happened. It moved up a lot today, even if they've stabilized for the past few months. Other than the banks, most companies don't like rising interest rates, but there are some exceptions like the ratings agencies. These are companies that help evaluate the riskiness of all sorts of debt instruments. They're the ones who tell if your bond is a triple-A or double-A or BB or just junk, which brings me to S&P Global. Wow, this is a great company. SPGI, you know it's a company formerly known as McGraw-Hill Financial. S&P gets most of its money from the ratings business, but they also have this really interesting market intelligence division that gives all sorts of professional traders and investors the data and analytics tools they need. And of course, the other guys who run the S&P 500. One of the company's most recent quarter was solid. It's just as the stocks of the ratings agencies were rising in tandem with long-term interest rates. So when rates seemed to temporarily peak earlier this summer, S&P seemed to lose some of its mojo. The question is, have we missed the move or does this have more run? Or maybe that's just the wrong metric that it's trading with. Let's take a closer look with Doug Peterson, the president and CEO of S&P Global, to learn more about how his company is doing and where it's headed. Mr. Peterson, welcome to Mad Money. Good to see you, sir. Thank you so much for coming on. Have a seat. No, I gotta tell ya, I look at your company and what an extraordinary company. And I just think it's FinTech, meaning that it's got secular growth, bought back a lot of stock, generates a lot of cash, and that the linkage to the long-term bond is just warm.
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Douglas Peterson2:11
Well, first of all, thanks for having me. This is an exciting time, and we do watch all the things you talk about every day. We watch the interest rates, we watch what's happening with economic growth. Today we are very carefully watching what happened with the employment. So these are themes that are embedded across the company.
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Jim Cramer2:25
But at the same time, I've been watching your acquisitions, whether the potential will be Rate Watch, which I'm quite familiar with, along with SNL, which I've always loved. That's not a new acquisition. I'm looking at what I regard as data that absolutely is indispensable regardless what rates do.
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Douglas Peterson2:42
Yeah, we're really embedded. The way I talk about it, we're embedded in the fabric of the financial markets between the ratings, which are used in so many different ways. You won't believe it, by benchmark performance by traders, by analysts, by risk managers. But if you're involved day-to-day, it's funny. We're a business that actually has been in the data business for over 150 years, and we know how to monetize data. We know that it's utilized in a way that's embedded and necessary for people to make decisions. And we have subscription businesses and we have transaction businesses. This is our business model. And one of the things you just referred to, we've been enhancing our business by adding new capabilities, new data feeds. And one of the biggest themes that's growing up right now is alternative data, and another one is ESG. So as we have this platform today of foundational analytics tools, we're starting to find demand for new things that we keep adding into our portfolio.
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Jim Cramer3:54
Let's talk about China.
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Douglas Peterson4:11
It's the largest economy in the world. It's the third largest bond market. It's still essentially a bank market. When you look at their financial markets, most of the corporate debt is on bank balance sheets. Even the loans, even the bonds are on bank balance sheets. But they need to start incorporating themselves into the global economy, and that means they need to have a bond yield, they need a yield curve, they've got to have a credit risk curve. They have to open up their capital account. And they're doing it in a way that seems to be very thoughtful. And we've been building relationships there, and we think that they're going to be looking at not just the ratings but also the data products and other market analytics as well.
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Jim Cramer4:48
All right, let's say there's some bad news that a company's accounting officer leaves, or maybe we got some sort of line that doesn't seem to jive with other things around them. Who are the data people? Data scientists, data engineers, publishing people, etc. Those 1,500 analysts are not only analyzing companies, analyzing governments, financial institutions, and issuing the ratings when a bond goes out, they also surveil them. And so they're watching. We have certain ways we look at indicators, frequently looking at bond spreads, at CDS, so we know what the market indicators are. But something comes up, some news comes up, a change of management news comes up, a change in financial statements. We would go back and we look at that. And I'm not involved in that. I'm very independent from the ratings analysts themselves.
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Douglas Peterson5:49
Yeah, but I'm sure we make sure that they don't go back to a situation like 2007-2008 where people weren't as tough. I mean, they get together and they talk not just in the region but also globally, and we look for credit indicators, we look for credit bubbles, we look for credit risk. And this is something that gets built across the entire practice.
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Jim Cramer6:25
Well, that's exactly what we need in a fixed income market, no doubt about it. Okay, that's Doug Peterson, the president and CEO of S&P Global. What a fabulous business model. Thank you again. Done. Thank you, sir. Yeah, good to see things. Booyah! Jim Cramer here from there, buddy. Thanks for watching. See me, see you on YouTube. Click here to subscribe and get the jump on my exclusives with CEOs, plus market news, investing advice, and a whole lot more.