Robert Fauber
President and Chief Executive Officer at Moody's
Thanks, Shivani. Good morning or good afternoon. Thanks everybody for joining today's call. I'm really looking forward to discussing our third quarter results with you. And we again delivered some impressive results with a 23% increase in revenue, an adjusted operating margin of approximately 48%, and 32% growth in adjusted diluted EPS.
And one of the key drivers of these great results was our rating business with a remarkable 41% increase in revenue versus the prior year period. September was a particularly strong month for issuance, included a new record for weekly investment grade activity with over $85 billion issued across 61 deals in the first week of September. Strength in first time and infrequent issuers drove transactional revenue up 70% for the quarter, and that outpaced global rated issuance growth of 51%. And this growth combined with ongoing cost discipline delivered over 600 basis points in adjusted operating margin expansion compared to last year.
So this year has obviously been a very strong issuance environment. In fact, it's likely to be the second strongest on record. And amidst that strength, we see both cyclical and secular tailwinds, they're going to drive future growth. And that includes refunding walls, M&A, and other market trends that give us confidence in the medium-term outlook for our ratings business.
In MA, we delivered 7% overall revenue growth and 9% growth for both ARR and recurring revenue, both of which exclude one-time revenue that we're intentionally de-emphasizing. Year-to-date customer retention is at 93% and our adjusted operating margin for the quarter was in line with our expectations at 30.3%.
Now, our Decision Solutions line of business, and that is banking, insurance, and KYC, that continues to lead MA with almost $1.4 billion of ARR, and that's growing at 12%. And last month, we marked the third anniversary of our RMS acquisition, so I'm going to spend a few minutes on today's call recapping our progress and performance there.
When I finish, I'll turn it over to Noemie to provide more color on our numbers, including raises to several of our full year guidance metrics, including our outlook for adjusted diluted EPS. But before I move to MIS, I do want to take a moment to acknowledge our third consecutive number one ranking in the Chartis RiskTech100. We're number one in 12 categories. And that's a testament to the breadth and depth of our solutions, to the strength of our competitive positioning, and to the trust that our customers place in us. So, a big shout out to all my colleagues who contributed to this fantastic recognition.
Now, moving to ratings. As I mentioned, we feel really good about the durable drivers of MIS growth as we look into the future, and those are both cyclical and structural. So looking at the market drivers, as you all know very well, the refunding walls are a key source of built-in growth. And last week, our analytical teams published their analytical report on the non-financial corporate refi walls in both the US and EMEA. And that data shows an 11% growth in the upcoming four-year maturity walls, which amount to almost $5 trillion, and that represents a record high.
Now, the majority of this growth is actually coming from spec grade issuers, where for the first time forward maturity walls exceeded $2 trillion, and that's up 19% from our last study. That's particularly true for the US market, where forward maturities are up 17% and spec grade refi walls are up approximately 27% for the upcoming four years. And that bodes very well for future issuance and, as I think many of you know, spec grade is obviously a positive to our revenue mix.
Now for any of you that want to dive deeper, and I'm sure there are many on this call, just check out the full reports that we've made available on our website at moodys.com or contact our IR team. Now another significant historical driver of ratings revenue growth is M&A, and activity in recent years has been well below historical levels as you can see on this chart. But we don't see that subdued level as sustainable, given the needs for private equity sponsors to both exit as well as deploy huge amounts of capital, along with a more benign rate environment and improve macroeconomic conditions.
Now, along with these market factors, there are also some structural trends that we believe will drive both credit supply and the need for independent third-party ratings and assessments. The first is private credit. That's been a consistent theme on our recent calls. And this sector is experiencing some significant growth. We expect that to continue. Last week, we published estimates that private credit assets under management will reach up to $3 trillion by 2028. And as this market grows, the need for transparency, data, and rigorous independent credit assessment is likely to become more important than ever. And as Apollo highlighted in their recent Investor Day, rating agencies have an important role to play in this ecosystem. I completely agree with that, and we're gearing up to ensure that we meet the needs of this market.
Now, the second is sustainable and transition finance. And to put this opportunity into context, currently countries and companies that have net zero commitments that cover something like 93% of global GDP. And our analysts estimate that in order to meet these targets, global clean energy investment needs are going to rise by 2.5 times by 2030 to around $4.5 trillion annually. So that means huge amounts of debt capital are going to be raised, and there's going to be increasing demand to understand how these investments are translating to organizations' progress on their decarbonization efforts. So we're investing to provide the insights, the analysis and the products to meet this demand.
Now, third growth driver is emerging and domestic debt markets. And many of you have heard me say before that domestic debt market issuers are the cross-border issuers of tomorrow. And while smaller than developed economies, emerging market countries typically average higher economic growth rates than more developed markets. So we've been investing to build-out our footprint and market leadership across Asia, Africa and Latin America so that we are poised to capitalize on this growth.
Finally, we're positioning our ratings business for a world of digital finance, and that includes blockchain and tokenization. And while the issuance volumes are relatively modest at present, there are a number of public and private sector initiatives and pilots in this space, and we want our ratings to play just as important a role in the digital issuance world as they do in today's analog world. So, as I said, a number of factors that give us confidence about our growth both in the near-term and over the medium-term for MIS.
Now as I mentioned earlier, we've just hit the third anniversary of our RMS acquisition. So I thought it made sense to take stock of our progress on today's call. And some of you may remember the financial profile of RMS before we acquired it, low single-digit revenue growth, EBITDA margins in the high-teens, and it was also early in its second cloud platform launch. And our investment thesis at the time was twofold. First, we thought there was much more that we could do for the insurance industry as we expanded our TAM to the property and casualty sector. And second, we believe that RMS's really rich climate and cat modeling capabilities would be increasingly important to a wide range of finance and risk applications, and also for a broader range of customers.
We also thought that Moody's represented a natural home for RMS after years of ownership by DMGT. So three years later, how have we done? Well, first, RMS is now fully-integrated into our Insurance Solutions business. Its growth has improved significantly over the last three years, and now is growing in line with the mid-teens ARR growth of our broader insurance business. It's also now operating at MA-like margins. Since we acquired RMS, we've also grown the number of customers on the cloud-based Intelligent Risk Platform fivefold to over 250. And these customers are using our next-generation of high-definition models, enabling them to get more granular insights, leveraging the power of cloud computing and also offering a great upsell pathway and competitive differentiator.
Now, as part of Moody's, RMS has also expanded the ways that it partners with the insurance industry. That includes last year's partnership with NASDAQ, where we're hosting third-party and in-house models on the IRP, our creation of a cyber industry steering group with the largest players in the cyber insurance market to develop tools to help this market grow, and our recent collaboration with Lloyds to build a greenhouse gas emission platform for the Lloyds insurance market.
And three years later, together with Moody's, RMS has solidified its blue-chip customer base with all 10 of the top 10 global reinsurance brokers, nine of the top 10 commercial lines insurers, and 28 of the top-30 global reinsurers. That really is market validation of RMS as the gold standard in the industry. We continue to invest to extend the solutions that we deliver for the insurance sector and beyond. And in early September, we announced the acquisition of Praedicat to expand into casualty analytics. And that's an area of growing interest for insurers. As I've talked about in past calls, we've leveraged RMS' platform technology and engineering teams across all of Moody's Analytics, and we've integrated their climate capabilities into solutions for banks and corporates.
So we feel really good about the progress with RMS. And earlier this year, we merged RMS and our legacy life business into a broader Moody's insurance solutions unit. So I feel even more confident about how this positions us for the future, both across the insurance industry, but also with respect to our ability to serve the needs of organizations to better understand physical risks from extreme weather and a changing climate.
With that, I'm going to hand it over to Noemie to provide more details on our numbers.
