S&P Global Q4 2021 Earnings Call Transcript

Participants

Corporate Executives

• Chip Merritt, Senior Vice President, Investor Relations
• Douglas L. Peterson, President & Chief Executive Officer
• Ewout Steenbergen, Executive Vice President and Chief Financial Officer

Analysts

• George Tong, The Goldman Sachs Group, Inc.
• Toni Kaplan, Morgan Stanley
• Kevin McVeigh, Credit Suisse Group AG
• Alex Kramm, UBS Group AG
• Ashish Sabadra, RBC Capital Markets
• Manav Patnaik, Barclays PLC
• Hamzah Mazari, Jefferies Financial Group Inc.
• Craig Huber, Huber Research Partners
• Trevor Romeo, William Blair
• Owen Lau, Oppenheimer Holdings Inc.
• Jeff Silber, BMO Capital Markets
• Jeff Meuler, Robert W. Baird

Presentation

[Operator]

Good morning, and Welcome to S&P Global's Fourth Quarter and Full Year 2021 Earnings Conference Call. I'd like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode. We will open the conference to questions and answers after the presentation and instructions will follow at that time. To access the webcast and slides, go to investor.spglobal.com. [Operator Instructions].

I would now like to introduce Mr. Chip Merritt, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.

[Chip Merritt, Senior Vice President, Investor Relations at S&P Global]

Thank you for joining today's S&P Global Fourth Quarter and Full Year 2021 Earnings Call. Presenting on today's call are Doug Peterson, President and CEO; and Ewout Steenbergen, Executive Vice President and Chief Financial Officer.

We issued a news release with our results earlier today. If you need a copy of the release and financial schedules, they can be downloaded at investor.spglobal.com.

Before we begin, I need to provide certain cautionary remarks about forward-looking statements. Except for historical information, the matters discussed in today's conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates, and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements.

In this regard, we direct listeners to the cautionary statements contained in our Form 10-Ks, 10-Qs, and other periodic reports filed with the US Securities and Exchange Commission.

In addition, as announced late in 2020, S&P Global and IHS Markit entered into a definitive merger agreement. In March last year, shareholders of both companies overwhelmingly voted in favor of the merger. The merger is pending regulatory approval, and we currently expect to close this quarter. This call will touch on the merger, but does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities law of any such jurisdiction. No offering of securities shall be made except by means of prospectus meeting requirements of Section 10 of the Securities Act of 1933.

In connection with the proposed transaction, S&P Global and IHS Markit have filed a registration statement on Form S-4 with the SEC, which includes a joint proxy statement and a prospectus. S&P Global and IHS Markit have filed other documents regarding the proposed transaction with the SEC. Investors and security holders of S&P Global or IHS Markit stock are urged to carefully read the entire registration statement and joint proxy statement and prospectus, which are available on our website and sec.gov.

In today's earnings release and during the conference call, we're providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management.

The earnings release and the slides contain exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with US GAAP.

This call, especially a discussion of our outlook, contains statements about expected future events that are forward-looking and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from expectations can be found in our filings with the SEC and on our website.

I would also like to call your attention to a European regulation. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should give me a call to better understand the impact of this legislation on the investor and potentially the Company. We're aware that we do have some media representatives with us on the call. However, this call is intended for investors and we would ask that questions from the media be directed to Ola Fadahunsi at 212-438-2296.

At this time, I would like to turn the call over to Doug Peterson. Doug?

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thank you, Chip. Welcome to everyone joining today's earnings call, the first thing I'd like to do is thank our people at S&P Global for their dedication and commitment throughout 2021. We've asked a lot of our people this year as they do their day jobs while also preparing for the expected merger with IHS Markit, and all the while dealing with the uncertainty of the pandemic. So on behalf of the Board and our management team, thank you.

Now let me turn to the key financial achievements in 2021. S&P Global delivered 12% organic revenue growth and 17%, adjusted diluted earnings per share growth. All four businesses contributed with growth in both revenue and adjusted operating profit margin. This is quite an achievement following the remarkable results of 2020. We generated $3.5 billion of free cash flow excluding certain items and returned $743 million in dividends.

In addition to the very strong financial results, we made significant progress on our key initiatives as well. Clearly, the most important initiative of the year has been on preparation for the merger and the multiple rounds of synergy validation. Upon closing of the merger, we are well prepared to rapidly begin operating as one company and to begin to realize both the cost and revenue synergies we've already outlined to you.

In fact on a run rate basis, we have already achieved pre-realized synergies of $25 million by the end of 2021. Also, after the merger is completed, we will host a post-merger investor call to provide an update on the merged company's strategy, business segment details, synergies, investment programs, share repurchase plans, and guidance.

The other key initiatives achieved in 2021 include the rapid progress achieved on our 2020 multi-year productivity program. Numerous new product launches and expanded product capabilities resulting from our strategic investment initiatives. The creation of Sustainable1 to manage and drive significant expansion in coordination of ESG product offerings across the Company.

The launch of S&P Platts Dimensions Pro, a fully integrated user experience connecting pricing, market commentary, news and analytics with special emphasis on energy transition and continued progress in China with one example, being the issuance of 57 domestic ratings in China, up over 150% from 2020. This included the first dual-rated bond. I'll provide more detail on many of these items in today's call.

These are the strategic initiatives that we shared with you on our fourth quarter earnings call last year. We made great strides in each of these items and we'll remark [Phonetic] in more detail on many of them today.

To recap the financial results for the full year, organic revenue increased 12% to $8.3 billion. Our adjusted operating profit increased 15%. Our adjusted operating profit margin increased to 190 basis points to 55.2%, and we delivered a 17% increase in adjusted diluted EPS. It's important to note that adjusted EPS of $13.70, far exceeded our original 2021 guidance of $12.25 to $12.45. And with the adjusted operating profit margin of 55.2%, far exceeded our original guidance of 53.8% to 54.3%. Much of this was due to unexpected outperformance in ratings following what was a very strong 2020. Ewout will review our fourth quarter financial performance in a moment.

All four divisions delivered revenue growth and adjusted operating profit improvement. The largest revenue gain was the 16% in indices. After several years of elevated investment spending, Market Intelligence delivered the largest adjusted operating profit margin increase with a gain of 190 basis points. It's important to remember that our 2021 financial results are part of the solid track record of performance. Over the past four years, we've posted a compound annual growth rate of 8% for revenue, and we have averaged 217 basis points per year of adjusted operating profit margin expansion, and this has resulted in a nearly doubling of our adjusted diluted EPS over that timeframe.

The Company also continued to advance its own industry-leading practices in sustainability. We issued our 10th annual sustainability impact report and third annual TCFD report. We expanded parental leave to 26 weeks and introduced the flexible time-off policy with no prescribed maximum in all eligible jurisdictions.

We established a $1.5 billion senior unsecured revolving credit facility tied toward published science-based target goals. One of the first sustainability-linked banking facilities in the US.

Our S&P Global Foundation increased its grants by 30% to $15 million to organizations that support COVID-19 relief, diversity, economic inclusion and environmental sustainability, and our efforts have been recognized by several leading third parties. While we continue to improve our own internal sustainability programs we're investing in our ESG business. In 2021, we launched Sustainable1 to elevate and coordinate external ESG efforts across the Company. This resulted in ESG revenue of $98 million, a 51% increase over 2020. All our key ESG products contributed to this growth.

We completed 59 ESG evaluations, up 48%. 43 green evaluations, up 79%. 103 SAM benchmark engagements, up 36%, and we launched social and sustainability framework alignment opinions and completed 42 of them. We ended 2021 with ESG ETF AUM reaching $32.2 billion, an increase of 59% versus year-end 2020

At the core of our ESG efforts are the corporate sustainability assessments. These are a key differentiator versus our competitors as they enable us to collect an enormous amount of data directly from corporations around the world.

For the methodology year that ends in March, we have already increased CSA survey participation by 58% to 2,190 companies. We also enhanced ESG offerings available on Capital IQ Pro, expanded S&P Global ESG scores coverage to 11,500 companies, and expanded coverage of climate-risk analytics to more than 3 million physical assets such as mines, power stations, and buildings.

In addition to excellent commercial progress and expanded capabilities, we also launched numerous new ESG products and initiatives in 2021. While I don't have time to delve into each one of them, let me just comment on a few. Second-party opinions assess a transaction against a sustainable finance framework for alignment with consistent and comparable market principles and standards. Climate change is created the need to evaluate the impact of different climate-related scenarios on counterparties, investments and portfolios. To support these efforts, Market Intelligence and Oliver Wyman climate credit analytics, a climate scenario analysis and credit analytics model suite.

In December, we acquired The Climate service. The company sells the Climanomics platform, a tool that quantifies physical climate risk for corporates, investors and governments. Kensho continues to be a driving force for productivity improvement for the Company and increasingly for our customers. The key capabilities they have created are listed on this slide. Codex is an AI-powered document viewer, that enables efficient navigation and extraction of relevant information from large quantities of documents. There have been over 300,000 client users to date. Codex is available on Capital IQ Pro.

Kensho AGAVE has transformed Platts process for creating price assessments. The AGAVE tool developed by engineers at Kensho and Platts has transformed the process for creating price assessments. Platts has implemented AGAVE in 40 of [Phonetic] 57 markets targeted, and on average, daily price assessments are completed 70 minutes faster. Internally, Kensho Link facilitated quicker data ingestion by providing automated mappings for 60 million company entities. Externally, Kensho Link was used by our customers to efficiently map 16 million of their own entities to S&P Global unique identifiers.

Many of our customers have taken note of Kensho's capabilities and we've begun monetizing Kensho Link, Kensho Scribe, RPA, data extraction and machine learning development.

While the innovation we create internally is what drives much of our success, key industry trends also help. One of those is the shift into passive investing. This chart illustrates the $1.9 trillion of cumulative AUM US equity flows in the past 10 years. We are a prime beneficiary of this trend. If we look at ETF AUM associated with our indices, there has been a 173% increase over the past five years to $2.8 trillion. We believe that this trend will continue.

The increase in global issuance has been another positive trend for the Company. It's hard to believe, but 2021 issuance growth of 15% exceeded 2020 issuance growth of 13%. As is often the case, there were pockets of strength and pockets of weakness. In 2020 global investment grade and high yield were the strongest, while in 2021 leveraged loans and structured products were the fastest-growing categories. The market clearly favored leveraged loans over high yield in 2021. The bars on these charts depict leveraged loan volume, which soared in 2021. The lines to pick the percentage of loans that we rated which reached new heights of 95% in the US and 93% in Europe.

I'd now like to shift the presentation to our outlook for 2022. The latest global refinancing study was issued earlier this month. The total amount of global debt maturing in this study is $11 trillion over the next five years. This is down 3% from the $11.3 trillion highlighted in last year's study. The chart on the right depicts the global high yield debt and leveraged loans maturing over the next five years. It totals $2.9 trillion, down 3% from $3 trillion in last year's study. It appears that 2021 issuance benefited from a bit of extra pull forward. Let's put this small decline in upcoming maturities into perspective.

This chart shows total global corporate debt outstanding for the past six years. This increase to the compounded annual growth rate of 6%, the vast majority of this debt will get refinanced and the pool of debt that needs to be refinanced just keeps getting larger. After exceptional issuance growth in 2020 and 2021. Our Ratings Research Group anticipates that issuance will decrease 2% in 2022. The forecast calls for gains in structured, US municipal and financial services issuance of 3%, 2%, and 1%, respectively. And a decrease in non-financial 7%. Please note that this is an issuance forecast, not a revenue forecast and it does not include leveraged loans.

Now, let's start with the latest view from our economists. They are forecasting global GDP growth at 4.2% in 2022. The global economy is in the midst of a robust but uneven rebound from the pandemic. Demand growth is outrunning supply growth and inflation has risen quickly almost everywhere. GDP growth in the US and Europe reached multi-decade highs in 2021 and have continued in 2022. Inflation is proven to be more persistent than thought and now presents a key policy challenge in the US and Europe. Our economists now expect at least three Fed rate hikes this year starting in March.

Each year, we carefully assess the external factors facing the Company. This slide depicts those that we think are most important going into 2022. Probably the most important positive factors are the expectation for continued healthy economic growth, borrowing costs that remain historically low, continued AUM flows from active to passive, elevated commodity levels that helped the financial stability of commodity producers and ample liquidity.

The most significant negative factors are geopolitical uncertainty, sticky inflation, Central Bank rate increases, and a repricing of equities. And of course, the pandemic and supply chain disruptions remain general risks facing the global economy.

Before I finish, I want to say that I'm incredibly proud of the team we've built at S&P Global, and I look forward to welcoming the talented IHS Markit employees to S&P Global. We're hopeful we'll be speaking with you soon to update you on the merger. Once the merger is complete, we will immediately begin building a new company with an even brighter future.

And now I'd like to turn the call over to Ewout Steenbergen, who is going to provide additional insights into our financial performance and outlook. Ewout?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Thank you, Doug, and welcome to all of you on the call. Let me start with our fourth quarter financial results. Revenue increased 12%, adjusted corporate unallocated expense increased 38%, primarily due to increased incentive compensation, higher professional fees, and the timing of contributions to the S&P Global Foundation. Adjusted total expenses increased 9%, and I'll come back to this on the next slide.

Adjusted operating profit margin increased 120 basis points. Interest expense decreased 22%, primarily due to a reduction in FIN 48 interest expense accruals, and adjusted diluted EPS increased 16%. Total adjusted expenses for the full year increased 7%. For the fourth quarter, they increased to 9%. The fourth quarter increase was primarily due to elevated variable expenses, including incentives, commissions, and royalties as a result of strong 2021 financial performance. Severance charges related to management changes in the Indices business during the quarter, increased investments in growth initiatives, increased professional fees, and the resumption of T&E spending.

During the fourth quarter, the non-GAAP adjustments totaled to a net pretax loss of $131 million. They included $21 million for merger transaction cost, primarily legal fees, $42 million for merger integration cost, primarily consulting fees, retention bonuses, branding and technology integration costs. $51 million for merger costs to achieve, which will drive synergy benefits, they include lease impairments and restructuring charges. $4 million for acquisition and divestiture-related expenses. $8 million in gains from real estate sales, and $21 million in deal-related amortization.

This quarter, all four segments delivered increased revenue with Indices leading the way with an 18% increase. All four segments also delivered adjusted operating profit growth with Ratings leading the way with an 18% increase. Quarterly margins were mixed, but more importantly, all four segments reported a gain in adjusted operating profit margin for the year.

Each year, on our fourth quarter earnings call, we share the changes in our headcount. In 2021, headcount decreased 1% primarily for two reasons. The first is operational efficiencies. Much of the operational efficiencies were from automation. In fact, our people created 225 bots in 2021 with Market Intelligence leading the way with 167 bots. Cognitive automation and RPA generated over 600,000 hours of savings in 2021.

The second is pre-realized merger synergies. Because of the pending merger, it didn't make sense to backfill many positions when people left the Company in 2021. We estimate that there were about 150 S&P Global positions left unfilled, representing pre-realized synergies of approximately $25 million by year-end 2021.

This year, with the formation of Sustainable1, we added this as a new category. Many of the people in Sustainable1 were previously reported in other categories.

Platts was the area with the largest headcount increase at 11%, due to investments in several growth projects. Market Intelligence had the largest decrease at 6%, largely due to automation efficiencies and realignment to Sustainable1.

Last year, we shared this slide and estimated that we would invest $100 million on growth initiatives in 2021. We ended up investing $80 million. The primary reasons for the difference were the competing priorities due to the merger and the competitive labor market. We will share our 2022 investment spending plans after the merger is completed.

On our third quarter 2020 earnings call, we introduced a new $120 million productivity program to be completed over a two to three-year period. I'm pleased to report that only after 18 months, we have already largely completed the program. There are a few small procurement projects that are awaiting the close of the merger to take advantage of the increased scale of the combined Company. All our productivity efforts will now be focused on achieving the merger synergies.

Now turning to the balance sheet. Our balance sheet continues to be very strong with low leverage and ample liquidity. We have cash and cash equivalents of $6.5 billion and debt of $4.1 billion. Our adjusted gross debt to adjusted EBITDA improved since the end of last year to 1.8 times.

Free cash flow excluding certain items, was $3.5 billion in 2021, an increase of $217 million or 7% over the prior-year period. Because the share repurchase program was suspended due to the pending merger with IHS Markit, we only returned 21% of free cash flow to shareholders in 2021. After the merger is completed, we expect to significantly ramp up share repurchases.

Now let's turn to the division results. Starting with S&P Dow Jones Indices, the segment delivered 18% revenue growth, primarily due to gains in AUM linked to our indices and increased exchange-rated derivative activity. Our asset-linked revenue also included the benefit of a customer underreporting true-up.

In the fourth quarter, we reported a 28% increase in adjusted expenses, primarily due to severance, increased incentive compensation, commissions, and royalties; a 13% increase in adjusted segment operating profit and an adjusted segment operating profit margin of 65.7%, a decrease of 280 basis points. On a trailing four quarter basis, the adjusted segment operating profit margin increased 80 basis points to 69.9%.

S&P Dow Jones Indices delivered growth across all revenue channels this quarter. Asset-linked fees increased 18% with very strong gains in ETFs and mutual funds. Exchange-traded derivative revenue increased 30%. Data and custom subscriptions increased 10%. Activity at the CBOE increased in the fourth quarter with S&P 500 Index options activity increasing 47% and fixed futures and options activity increasing 18%. CME equity complex volume increased 15% with particular strength in E-mini S&P 500 options.

Ratings reported revenue increased 12%. Adjusted expenses increased 5%, primarily due to increased incentive compensation, wages and outside services. This resulted in an 18% increase in adjusted segment operating profit and a 300 basis point increase in adjusted segment operating profit margin.

On a trailing four-quarter basis, adjusted segment operating profit margin increased 180 basis points to 64.2%. Non-transaction revenue increased 7%, primarily due to fees associated with CRISIL, new entity credit ratings, and surveillance, partly offset by lower Rating Evaluation Service. As an aside, we added over 1,000 new entity credit ratings in 2021.

Transaction revenue increased primarily due to strength in investment-grade corporate bonds, bank loans, and structured products.

This slide depicts Ratings revenue by its end markets. The largest contributor to the increase in Ratings revenue was the 14% increase in corporates. In addition, financial services revenue increased 5%, structured finance increased 32%, governments decreased 11%, and the CRISIL and other category increased 14%.

On the right side of this slide, you can see the changes in revenue within structured products. The largest change was in CLOs, which increased 43%.

Turning to Platts. Revenue increased 12% or $26 million, including a $4 million commercial settlement. Approximately 14% of this growth was from new products. Core subscriptions increased 10%, and Global Trading Services increased 13%. The gains in GTS revenue were mainly from higher petroleum and iron ore volumes.

Adjusted expenses increased 16% primarily due to increased commissions, growth investments, cost of sales and incentives. Adjusted segment operating profit margin decreased 160 basis points to 50.1%. The trailing four-quarter adjusted segment operating profit margin increased 40 basis points to 55.1%.

Platts delivered excellent revenue growth in every category with notable increases in natural gas, power and renewables, and petrochemicals.

Market Intelligence delivered revenue growth of 8% or $42 million, with 34% of the growth coming from new products. Usage of our key market platforms increased 4% year-over-year, while year-ending active users increased 13% to 299,000 users.

Adjusted expenses increased 5% due to increased cloud hosting initiatives, royalties, incentives and commissions. Adjusted segment operating profit increased 15%, and the adjusted segment operating profit margin increased 200 basis points to 32.7%. On a trailing four-quarter basis, adjusted segment operating profit margin increased 190 basis points to 34.3%.

Looking across the Market Intelligence components. Desktop revenue grew 6%. During 2021, Market Intelligence rebranded its premier platform offering as Capital IQ Pro. The Capital IQ Pro platform combines the best of Capital IQ and SNL desktops with broad public fundamentals and deep industry data. In addition, the platform offers greater visibility into private companies and private markets as well as regulatory, supply chain, climate data and analytics, and ESG scores.

Data Management Solutions revenue grew 11%, and Credit Risk Solutions revenue grew 8%. Due to the pending merger, the Company will not provide guidance for 2022 at this time but will provide 2022 guidance for the combined company after the merger is completed. We continue to expect the merger to close this quarter.

In addition to the slides that we have reviewed on this call, there are additional slides in an appendix that can be downloaded from the Investor Presentations section of the Investor Relations website.

In conclusion, 2021 was a noteworthy year for S&P Global. We delivered strong financial results, realized significant growth, made considerable progress on merger preparation and synergy validation, and launched multiple innovative new products across the Company, including our Sustainable1 product offerings.

And with that, let me turn the call back over to Chip for your questions.

[Chip Merritt, Senior Vice President, Investor Relations at S&P Global]

Thank you. [Operator Instructions]. Operator, we will now take our first question.

Questions and Answers

[Operator]

Thank you. Our first question comes from George Tong with Goldman Sachs. Your line is open.

[George Tong, Analyst at The Goldman Sachs Group]

Hi, thanks. Good morning. With respect to the merger with IHS Markit, can you elaborate on what steps remain for the companies to complete before the transaction can close?

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Hi, George. This is Doug. Thanks for the question. Well, first of all, as you know from our last call and what you've seen that we've released, we have approval from all of the regulators that we require approval from to close the merger. And -- but those are conditioned on certain divestitures.

So with the UK CMA, we are -- have already presented them with approved buyers for the Base Chemicals business, which is News Corp. We're waiting for their approval of that potential buyer. Then the second would be from the EC. We have -- they've looked at all of the divestitures and the additional one from them is CUSIP, which we've announced that we signed a contract with FactSet. And we're waiting for them to approve them as an acceptable divestiture partner. Other than that, we're ready to go.

[George Tong, Analyst at The Goldman Sachs Group]

Got it. Very helpful. You've realized pre-realized merger synergies over the course of 2021 and early 2022. Given your work around synergy realization, how are your views on revenue and cost synergies from the transaction changed?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Good morning, George. This is Ewout. Obviously, we have continued to work on further validating our synergies, both on the cost side and on the revenue side. We have, in the meantime, had five rounds of synergy submissions by our work stream. So they do a lot of work on substantiating synergies, building bottom-up plans and further really developing concrete initiatives around these synergies. So the confidence level is going up for each of those submission rounds. I cannot give you specific numbers today. We'll get back to you during the merger call. But a lot of work is continuing, so we're ready to realize the synergies immediately after completing the transaction.

[George Tong, Analyst at The Goldman Sachs Group]

Got it Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, George.

[Operator]

Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

[Toni Kaplan, Analyst at Morgan Stanley]

Thanks so much. Wanted to ask on Ratings. You mentioned down 2% issuance for this year that your Ratings Group is forecasting. Just given the potential for rising rates, you mentioned you're expecting three rate hikes. I guess how are you thinking about upside versus downside to that net down 2% number?

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah, Toni, thank you for that. First of all, let me just share a little bit of the color of the market. As you know, last year was -- we had a lot of mixed movement in the Ratings. As an example, the corporates in the US were down 30%. Financial institutions were up 17%, and then as an example, globally structured credit, which is CLOs, was up 265%. So we saw a lot of mix in the movements.

And our analysts and the team at the S&P Global Ratings Research team have been looking across all of those types of factors, what was the part of issuance. One thing that they've looked at is what was the growth in issuance over the last couple of years in all the different sectors? What's the M&A landscape? What are we seeing for the pipeline of LBOs, private sector transactions, private credit transactions.

And what they see right now is in the -- what we call the corporates or the industrials that they're expecting they'll be down by about 7% next year with a range of negative 15% to negative 5%. Financial services relatively flat, up about 1% with a range from down 5 %to up 5%. Structured finance at about 3% growth for the year with could go down as much as 5%, could go as much up as 8%. And then public finance at about 2%, either flat to up 5%. So that gives you a total of down about 2% with a range that could go down 8%, and it could go up to 3%.

As I said, this is based on the factors of looking at the pipeline, looking at outstanding issuance, maturities that are coming up, M&A pipeline, what we've learned from the banking sector on what they see with the private transactions, et cetera.

[Toni Kaplan, Analyst at Morgan Stanley]

That's great, very helpful. And wanted to ask on ESG. So you've mentioned in the past that most of the ESG revenue right now is in Platts. But there are significant opportunities in the other segments, and you've mentioned a number of those earlier in the call.

But just how should we think about the ramp of ESG in the different segments? Like would you expect like Market Intelligence to be able to ramp first or Index? And should we see this being sort of a gradual opportunity over time? Or as things gain traction, massive step up somewhere? Just how should we think about going forward?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Good morning, Toni. If you look at the revenues for ESG, we're very pleased with the growth during 2021. We realized 51% growth in revenues across the Company. And so overall, we are continue to be committed to that 40% CAGR that we have laid out before.

Your question with respect to each of the segments, you're right that Platts is still the highest, the largest in terms of ESG revenue contribution. Market Intelligence is very closely following now the Platts business. And what we are seeing that, besides Platts, particularly Ratings, Market Intelligence and the Index business are having the highest growth of each ESG revenues at this point in time. So this is clearly an enterprise-wide initiative. That's why we have created the Sustainable1 group that is looking across the Company and driving commercial initiatives for the company as a whole. And we continue to be very excited about the outlook for the ESG revenues and particularly also seeing that growth in the other segments outside of Platts.

[Toni Kaplan, Analyst at Morgan Stanley]

Terrific. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Toni.

[Operator]

Thank you. Our next question comes from Kevin McVeigh with Credit Suisse. Your line is open.

[Kevin McVeigh, Analyst at Credit Suisse Group]

Great, thanks so much, and congratulations. Obviously, there's a lot going on and just really, really nice outcome. Hey, Doug or Ewout, could you talk about -- obviously, there's the focus on rates, but there's market volatility as well. Maybe talk about how the volatility impacts the Indices business, the Market Intelligence and then Platts as well, because I think there's puts and takes across the model, but maybe the increased volatility, again, how that impacts Indices, Intelligence and then maybe just a spike in oil within the context of Platts, if you could?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Absolutely, Kevin, and good morning. Actually, the way how we look at volatility, that is, in many cases, also a positive for our businesses, because if there's more volatility going on in the markets, more activity happening. There is more demand for our products, for our research, for our insight and for our analytics. So actually, volatility in markets usually shows more, the higher value-add of our products. And then on top of that, we see two of our businesses that are directly benefiting from more volatility from a trading perspective. We have Global Trading Services revenue in Platts that is going up when there's more market volatility in the commodities markets. And then we have the exchange-traded derivative activity in the Index business, which is the case that there is more hedging going on in more volatile equity markets, and that is one of the revenue drivers of our Index business. So clearly, volatility is helping the Company both from a value-add, but then also about directly two [Phonetic] revenue streams in both the Index and the Platts business.

[Kevin McVeigh, Analyst at Credit Suisse Group]

That's great. I'll get back in. Thank you so much.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thank you, Kevin.

[Operator]

Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.

[Alex Kramm, Analyst at UBS Group]

Hey. Good morning, everyone. Wanted to come back to the ratings agency discussion for a second. Doug, you mentioned, obviously, that the forecast from your team doesn't include loan markets. But if you look at the loan business for you, in 2021, obviously, that business doubled. So curious where you shake out in terms of loan market expectations in terms of issuance. And obviously, that filters into structured finance as well in case it's a soft environment, which we've seen so far in January. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Thank you. Well, when it comes to the loan market, we still see conditions which are quite attractive for loan issuers. First of all, even though there's discussions about rates going up, we've seen estimates from three, four, five, six, even seven hikes recently as the last couple of days, our own economists have increased their expectation for rate hikes in the US up to a range of more like five or six now. But even if you look at rates, rates are still quite low. And there's a lot of demand for floating rate instruments, given that the rate cycle and there could be increases there.

We also see a very strong M&A pipeline. As you know, M&A is one of the biggest drivers of loan issuance. As people complete M&A, they many times are financing it with a bridge loan or potentially going into the loan market. So when we look at the entire market, we think that even though rates are going to be going up, they're still low on historical levels. Spreads are very tight. There's a lot of demand for floating rate paper. There's a large pipeline of transactions coming through, both from a combination of M&A as well as private equity transactions. So we're seeing right now still a very strong market for loans into the near future.

[Alex Kramm, Analyst at UBS Group]

All right. Fair enough. And then, maybe this could be for Ewout or you. Inflation, obviously, is a topic that's been coming up a lot. Curious -- I know you're not giving any guidance at this point, but how you think on the one hand, that could impact your cost pressure that I think we've seen with other companies? And then, maybe remind us how much CPI you have built into some of your contracts in Market Intelligence, maybe Platts. So I guess the question is where could inflation actually help organic growth in 2022, which some people may not be thinking about? Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Alex. I'm going to start, and then I'm going to hand it over to Ewout. Well, first of all, when we look at inflation, we see that last year, as an example, in the US, it was a 7% annualized rate in December. That annualized rate of 7% has, obviously, led to a very animated discussion about interest rates in the US. So as we built our plan and we're looking forward, we've been looking at this in the US and the UK, around the world. So first impact is we believe that interest rates will be going up. You've seen them go up in the UK. They're talking about it in the EC. The ECB has now been rumored to be looking at interest rate increases. And then in the US, there's expectations this year. So we've built those factors in. When it comes to labor markets, that's one of the areas I'm watching myself quite closely, both from a systemic point of view and then for our company itself. We've seen some wage pressure in areas like technology roles. There are some ESG roles that we've seen some pressure, wage pressure, because those -- we're obviously going to be paying market rates. But let me hand it over to Ewout to give you some more thoughts about how we're applying it for our budget for this year.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Good morning, Alex. If we think about the impact of inflation on the Company, we think, overall, this is going to be manageable for us because of a couple of reasons. Obviously, there will be expense increases with respect to people costs and procurement. And as Doug said, we are making some targeted adjustments for certain job groups within the Company. But then, the offsets are the following. We are continuing to run productivity programs, and you have seen that we have made quite good progress with the program we announced in 2020. Of course, we're getting the significant synergy programs. And then, we have an opportunity based on the high value-adds of our products and services to achieve more favorable contract terms and fees over time when we are at that point of renewal. Obviously, that depends on facts and circumstances for each of our businesses. But clearly, we will be looking at balancing growth, margins, customer relations, and then ultimately, shareholder value by managing the impact of inflation. But as I said at the beginning, we think that is overall manageable from a financial results perspective.

[Alex Kramm, Analyst at UBS Group]

Very helpful. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Alex.

[Operator]

Thank you. Our next question comes from Ashish Sabadra with RBC Capital Markets. Your line is open.

[Ashish Sabadra, Analyst at RBC Capital Markets]

Thanks for taking my question. Just going back to the -- when the INFO acquisition was announced, the Company had guided to a mid-single digit EPS growth for '22. I understand you will provide the guidance on the -- after the acquisition closes. But a lot has changed since then. So I was just wondering if you could just provide us some puts and takes since the original guidance was given and whether the buyback was included in that original guidance? Any incremental color will be helpful. Thanks.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Ashish, fully understand, this is a very unusual situation that we cannot provide you guidance at this point in time. Having said that, you should expect us, from a philosophical perspective, how we manage the Company to continue exactly for what you have seen us doing in the past and what we have told you before. So expect to grow revenues in all of our businesses in 2022 and also to continue to expand our margins. And we will be more specific during the merger call and give you more quantification around that.

[Ashish Sabadra, Analyst at RBC Capital Markets]

That's very helpful color. Thank you for that. And then, just on the multi-year productivity, it's great to see the progress there and ability to pull forward -- or ability to execute at a better-than-expected pace and then now the focus on cost synergies going forward. Just a question there would be, is there opportunity for -- as we -- in addition to the cost synergies, could there be more opportunities for productivity -- global productivity improvement on standalone businesses as well? Thanks.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

We will continue to look at all the opportunities. You may expect us to see us continue to be very disciplined from a cost management perspective. There are areas where we are further looking at across the whole Company from productivity to real estate, to automation, many, many different areas. Again, we will give you a full update on what that means for the combined company from a synergy perspective. But overall, I'm very pleased with the progress we are making to get ready to start to realize those synergies and the concrete plans that we have put behind that. And as I said before, five rounds we now had in terms of synergy submissions by the work streams. So an incredible amount of work has gone into this to further validate and to bring up the confidence level in terms of what we will be able to accomplish.

[Ashish Sabadra, Analyst at RBC Capital Markets]

That's great. And congrats on such a strong quarter. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Ashish

[Operator]

Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.

[Manav Patnaik, Analyst at Barclays]

Thank you. I'm just looking at the Kensho slide here, and I just wanted kind of a high-level overview on what the pipeline at Kensho looks like just with S&P at the moment, and I imagine IHS Markit only opens up the doors there?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Thanks, Manav. And you know this is always one of my favorite topics to talk about. So we continue to be so excited about the initiatives of Kensho and how Kensho is helping to transform S&P Global and what it can do also for the combined company after we complete the transaction. You've seen some of the highlights of the accomplishment of Kensho during 2021, and we are expecting to see that continuing in 2022. We have such a complete toolkit of AI for unstructured data, which is about linking data, extraction, speech to text, the Codex platform that is now on Cap IQ Pro and has already 300,000 users to date. And you cannot imagine the amount of demand that Kensho will have going forward. We will have some prioritization decisions to make where we think we can create the highest value and where to use those resources.

Also, by the way, the attention for Kensho from external customers is going up at this point in time. There's more and more external activity happening. And also the relations with Kensho with some of the large technology firms is further expanding. So we're actually really excited that the external recognition of Kensho remains very high. So high-value creation for Kensho, and it's going to be really positive to see what is going to be next for Kensho in a way to help to catalyze innovation for the Company.

[Manav Patnaik, Analyst at Barclays]

Got it. Thank you for that. And then just a quick update on China. Obviously, the number of ratings is growing really nicely as you disclosed. Just wondering like is it revenue material yet, and what that kind of pace looks like?

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Thanks, Manav. Well, we're so excited about China. We have a fantastic team there with really good leadership. We've been out educating the market. As you know, there's been some opportunities for us to provide some seminars on credit. We've seen a very large increase in traffic coming to us, especially given the current credit environment in China. As you mentioned, we got up to 57 ratings in 2021. One of the things that's important to us is that they span the different levels of investment-grade ratings. They're broad, from AAA to BBB. We've rated financial institutions, corporates, structured. And the regulatory environment is also one where there are some very good initiatives going on to look at changing the floor of ratings that are going to be available for financial institutions and insurance companies. But our revenue is still light. It's not material to the Company. It's something that we're putting a major focus on in 2022, so we can drive our commercial organization faster and harder to take advantage of the really strong start that we're off to.

[Manav Patnaik, Analyst at Barclays]

All right. Thank you very much.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Manav.

[Operator]

Thank you. Our next question comes from Hamzah Mazari with Jefferies. Your line is open.

[Hamzah Mazari, Analyst at Jefferies Financial Group]

Hey, good morning. Thank you. My question is just on Market Intelligence. Could you just remind us, are all those contracts now on enterprise-wide arrangements? And maybe do you see the mix changing with Data Management Solutions kind of being a much bigger part? And any mix changes you see within this business post merger? I know it's one of your highest growth businesses and margins seem to have come back post some of your earlier investments.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Hamzah, good morning. Definitely, what we expect to see is that the Data Management Solutions is going to grow faster and becoming a more and more prominent part of the Market Intelligence business over time. So maybe going back to a couple of the comments you made, with respect to enterprise-wide contracts, that process is done. So we have now all our contracts on that basis. What you're seeing is very steady and healthy growth in desktop. We really like the commercial activity in 2021. We've seen some very healthy sales levels, and that sets us up well for 2022 from a desktop growth perspective, 6% reported growth. And that is more or less that mid-single digit steady growth is to be expected going forward.

Then, Data Management Solutions, in a normal quarter, you should see that grow at high-single digits to low-teens. We're a bit higher this quarter, about 11%, and a particularly nice growth in Marketplace and in the Trucost area as well. So those are doing particularly very well.

And then last, you were referring to margins. We have been investing, as you know, the last few years a lot in new growth initiatives in Market Intelligence. And we're very happy to see that paying off from an overall revenue growth perspective. And we said that you should see margins coming back in 2021 to that mid-30 levels. And we're very happy to see that, that actually also has taken place. So Market Intelligence is very well positioned, I think, for the next few years.

[Hamzah Mazari, Analyst at Jefferies Financial Group]

Got it. Very helpful. And just my follow-up question -- I'll turn it over -- is just around just the Ratings business. I know you highlighted your global issuance forecast for 2022, and I know your revenue differs obviously with that figure because of pricing and non-transactional business and mix, etc. But maybe could you talk about what you're seeing in Europe around issuance, maybe in Asia? I know you touched on China in some of your prepared remarks. But any thoughts as to outside of North America, how those markets look like as you look at 2022? Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Just to give you some thoughts about the markets, well, first of all, the numbers we gave you were a global issuance forecast, so it's taken into account all the different markets we're in. But Europe was very similar to the United States last year in full year and also in the final numbers in the quarter. Europe was down in corporates, but it was up in financial institutions, as well as very strong in CLOs and structured credit. In addition, the CMBS market in Europe was strong. We saw -- it's not a big market, but there was a lot of interest in CMBS in the European market. We see the continued conditions in Europe that are strong for capital markets. There is an interest, I've mentioned this before in other calls, in the European policy sector to stop having all of the dependence for corporate financing coming from banks and moving more to capital markets. As that continues, we see that as a long-term valuable trend for us. That trend in Asia is also something that we're seeing more of as well.

Just a little bit about 2021. In Asia, across all of Asia, both the corporates and financial institutions were up. Corporates were up about 10%, and financial institutions were up about 14% through the year, whereas the overall structured in Asia was only up about 30%, most of that being in traditional ABS and RMBS where the major volume is. But we do see, again, in Asia that move towards capital markets away from banking markets as a trend. There's also a lot more M&A activity taking place. And part of Asia, obviously, is China where we're on the ground floor there as that becomes a much more sophisticated market.

[Hamzah Mazari, Analyst at Jefferies Financial Group]

Got it. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Hamzah.

[Operator]

Our next question comes from Craig Huber with Huber Research Partners. Your line is open.

[Craig Huber, Analyst at Huber Research Partners]

Great. Thank you. Just wanted to touch on the cost a little bit further. You gave some good detail earlier on this. But in the fourth quarter, can you just touch on internal investment spending, how that may have differed dollar-wise, if you could, versus a year ago or sequentially, and also incentive compensation as well? Is that materially different? How has it accrued over the course of the year? And I have a follow-up. Thank you.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Yeah. Good morning, Craig, and thanks for asking that question. So I would first would like to point out that the expenses are unusually high during this quarter. The vast majority is not recurring, and you should see continued expense discipline from us going forward. So having said that, you were specifically asking about certain categories. So what you're seeing were from an expense growth perspective, that the majority of the growth was coming from variable expenses, performance-related expenses, which I consider good expenses because they're directly correlated with healthy sales and revenue activity. So these are commissions, royalties and incentive compensation.

Incentive compensation, you asked a specific question around that. We're accruing at this moment significantly above 100% for our short-term incentive compensation, and that's a bit higher compared to 2020. And also the performance factors of our long-term incentive compensation are running a bit higher than in 2020. So that drove some of the additional expenses.

With respect to growth investments, although you saw that they were overall a bit lower compared to the year before, that doesn't mean that it doesn't have an impact on the overall expense levels because some of those growth initiatives go to a baseline. And it means that some of the new growth initiatives are still incremental to what we already have in place. So overall growth in net investments drove approximately $15 [Phonetic] million of the expense growth during the fourth quarter.

So we think these are clear reasons why the expense growth is happening. The underlying recurring expense growth is actually very limited and very minimal.

[Craig Huber, Analyst at Huber Research Partners]

Then my follow-up, I guess, you guys touched on a little bit earlier about on bank loans, the outlook for that. Can you just go a little bit deeper? That's obviously a huge wildcard this year. Obviously, it's not included in your global debt issuance forecast. So maybe touch a little deeper what do you think the likely outcomes are for bank loans versus last year's strength of about 100%? Maybe touch on CLOs as well, as they think about this new year. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Craig. Yeah. Right now, I can talk to you a little bit about the conditions, but we're not giving any guidance right now for 2022. But as I mentioned, the conditions for the market as of the current market are still quite favorable for bank loans. In particular, the M&A market, we see is strong. There's a large backlog of transactions, which have already been announced that haven't been closed yet. You have a large private equity pipeline of transactions, which are going on. Even though interest rates are starting to go up, and we've seen the 10-year treasury hasn't hit 2%, but it's getting closer. But spreads are tight, and interest rates are still very low on a historical basis. There's a lot of demand as well from insurance companies, from banks and other institutional investors for floating rate paper. So we do think that the conditions are still very strong for the loan market. But as of now, we're not giving any specific guidance for 2022.

[Craig Huber, Analyst at Huber Research Partners]

Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Craig.

[Operator]

Thank you. Our next question comes from Andrew Nicholas with William Blair. Your line is open.

[Trevor Romeo, Analyst at William Blair]

Hi. Good morning. This is actually Trevor Romeo in for Andrew. Appreciate you taking the questions. Just a couple of quick ones for me. First, just wanted to go a bit deeper on Platts. With 12% growth in the quarter, I think 18% growth in the US, I know some of that might be onetime from a commercial settlement. Is there anything you'd call out there in terms of drivers of that strength? And how much is the strong commodity market driving growth kind of across the various areas of Platts right now?

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Good morning, Trevor. Definitely very pleased to see such a high revenue growth in Platts. I think it has been a long time ago, we saw Platts growing in the double-digit space. So this is really excellent results. You're right, there was that $4 million commercial settlement in those numbers. If you would take that out, you're at approximately 10% growth for revenues for Platts in the fourth quarter, so still quite strong. So what is happening behind there in terms of revenue growth? We see strong commercial momentum in both the core business, which is the price reporting business and the insights business. And that is mostly because we see customers being healthy with the current commodity prices. The current commodity market environment is actually very good for our customers. And then also Global Trading Services is doing well. We're growing clearly here based on the overall price volatility in the markets. And then the third reason behind this strong revenue growth of Platts is the new initiatives. We have invested in new initiatives like LNG, energy transition and agriculture, and they also start to pay off at this moment. So very pleased with the results of Platts overall.

[Trevor Romeo, Analyst at William Blair]

Great. Thank you. And then just a quick follow-up. Just wanted to ask about your recent acquisition of the Climate Service. I'm sure that's probably a fairly small acquisition. But just wondering if you could talk a bit more about how that kind of physical climate risk more broadly fits into your ESG strategy? Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah, thank you for that. The Climate Service is a really interesting business, and it's an excellent fit for us with the suite of climate products, in particular, that we've been putting together, both homegrown as well as the Trucost acquisition we made 4.5 years ago. It brings a platform called Climanomics, which is you're able to build across different data sets. It allows companies to look at their physical risk in many different categories, cyclones, hurricanes, fire, floods, etc. And it can be modeled to different approaches. As an example, the task force for climate-related financial disclosure modeling. So this is something that we find that it's a great fit for our organization. But more importantly, it also brings a really talented group of people, people who are entrepreneurial. They've got passion. They've got energy. And they're going to be a great addition to S&P Global as well because they're going to bring all of that energy as we build out even further our Sustainable1 business platform.

[Trevor Romeo, Analyst at William Blair]

Great. Appreciate the color. Thanks again

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Thanks, Trevor.

[Operator]

Thank you. Our next question comes from Owen Lau with Oppenheimer. Your line is open.

[Owen Lau, Analyst at Oppenheimer]

Good morning and thank you for taking my questions. I want to get your thought about the potential development of ESG this year. And there has been a lot of conversation about the inconsistency of ESG data and ratings, and there are obviously some benefits of ESG data as well. But could you please talk about some of the potential events or development this year that can potentially get us closer to a more standardized ESG disclosure or ESG data and ratings? Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Thanks, Owen. This is really an important area for us, both as S&P Global and as well as an industry. And by that, I mean, the entire financial industry as we look to this important factor that starts to get included in people's decision-making. What we see is that the ESG market itself for data and analytics as scores, it started to evolve as more and more insurance companies, institutional investors, asset managers take those factors into account as they make decisions. And as of now, as you know, the factors which are being used by different organizations are not the same. You have organizations that care more about climate. You have some that care more about diversity inclusion or supply chain. And so there's different language out there, whether it's an impact fund, it's an ESG fund, it's an ESG approach. And we're working very closely with different organizations such as the IFRS and ISSP. They're setting up the international sustainability standards for disclosure. The IOSCO, which is the International Organization of Securities Commissioners, is looking at new rules around the globe for disclosure as well, both disclosure from the point of view of issuers, but also disclosure that could be asked for by different types of investors as they sell their funds or sell their investments.

We do think that there is a really good effort going on across the private sector as well as NGOs along with these regulatory agencies to start addressing what would be the potential regulatory requests as well as the market themselves coming to standards of how we're going to be disclosing this. S&P Global for our products, all of our products, we provide very simple, clear, consistent disclosure on everything that we are providing in the ESG products. Our disclosure is built in a way that it's consistent, it's transparent, it's comparable. You can see what the actual criteria is that's used to determine an index or a score or the weighting of the score. And we think that, that's going to be a key differentiating factor for us as we build out our ESG business.

[Owen Lau, Analyst at Oppenheimer]

Got it. That's very helpful. And then one follow-up question is about the buyback. And again -- and I know you don't provide any specific guidance on buyback, but how should we think about kind of the magnitude and also the timing of the ASR? The stocks have traded down quite a bit since the beginning of this year. Would you be opportunistic to do one large ASR or you would do multiple ASR for the rest of this year? Thank you.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Yeah. Owen, let me explain to you philosophically what we are having in mind. Obviously, we need to do a catch-up because we have not been able to do buybacks over the last two years. The same applies for IHS Markit. We have the opportunity to do buybacks based on the proceeds of some of those divestitures. We're also, of course, looking at the overall refinancing that we can do of the IHS Markit debt and potentially some opportunity for upsizing. And then, very quickly, we would like to go in a normal course return of capital. We still are committed to the capital targets that provided at the call when we announced the merger, so at least 85% of return of free cash flow. So we definitely are ready to resume buybacks after the transaction is completed. And we would like to do that as quickly as possible in order to get in a normal rhythm again for the combined company.

[Owen Lau, Analyst at Oppenheimer]

Got it. Thank you very much.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Owen

[Operator]

Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.

[Jeff Silber, Analyst at BMO Capital Markets]

Thanks. I know it's late. I'll just ask one. In your comments, you talked a bit about labor costs. I was wondering if you can drill down a little bit more. First of all, is it more difficult to find and retain people? I know a lot of companies are talking about that. And then, what does that translate into the labor costs you've been incurring and what you expect for this year? Thanks.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Jeff. I'm going to start and then hand it over to Ewout. As I mentioned earlier, it's critical for us that we are competitive, and we're paying market rates in all of the different markets we're in. We're seeing a little bit of inflation or increase in job expenses, wage expenses, as I mentioned, in some specific areas like high-demand technology areas, data scientists. One market, in particular, we're seeing increase in some pressures in India. And I'll give you an example of something you might not have thought of, but we're actually seeing a lot of our recruiters getting recruited away. People are trying to hire people who can hire people. So we're seeing certain areas where we do see some increase in turnover, and we're seeing clearly the areas that we're watching quite carefully. But our philosophy is to pay market rates to ensure that this is a great place to work, and Ewout can talk a little bit more of how that translates.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Yes. In addition to what Doug said, I think we are not having any problem with hiring. We're still a very attractive company. People like to work for us. And to stay competitively from a pay perspective, we have made adjustments for certain job groups. Think about the ratings analysts at technology and ESG. And we're also increasing the merit levels in certain jurisdictions. So, that is just to make sure we stay competitive. But overall, as I said to an earlier question, we believe that the impact is manageable because we have opportunities also to look at productivity, synergy, efficiencies, automation as well as the opportunity to look at some contractual terms and fees over time.

[Jeff Silber, Analyst at BMO Capital Markets]

Okay. That's really helpful. Thanks so much.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Thanks, Jeff.

[Operator]

Thank you. Our final question comes from Jeff Meuler with Baird. Your line is open.

[Jeff Meuler, Analyst at Robert W. Baird]

Yeah. Thank you. Heard you loud and clear, no guidance at this time. But I thought Ewout said that you expect to grow revenue in all of your businesses in '22. If I could just confirm if that's what was said, obviously, asking specifically for Ratings, if that's the case.

And then, a related technical question, just given your team -- your Ratings team maintaining the down two issuance forecast, but also explicitly saying risks weigh to the downside. Did they lower the low end of the range and that down eight, seven [Phonetic] at the low end already reflects their current views of that downside risk? Or did they maintain the whole range and their kind of probability weighting different parts of the range or think there could be a future adjustment? Thank you.

[Ewout Steenbergen, Executive Vice President and Chief Financial Officer at S&P Global]

Good morning, Jeff. First, to your question about revenue growth, indeed, I said before that we expect to grow revenues in all of our businesses in 2022 and that we'll get back to you with more specifics during the merger call. With respect to your question about some of the ranges with respect to the issuance forecast by our Research Group, I think you're right that compared to a quarter ago, some of the ranges have widened. But overall, the issuance forecast is still at a minus 2% level. And ranges have become wider because as we showed you in one of those slides in the prepared remarks, clearly, there is more uncertainty in the macro environment. So the level of headwinds and potential tailwinds that we're seeing is a bit larger. So ranges are wider, but overall, the midpoint is still the same.

[Jeff Meuler, Analyst at Robert W. Baird]

Makes sense. And thanks for the reinforcement. Thank you.

[Douglas L. Peterson, President & Chief Executive Officer at S&P Global]

Yeah. Thanks, Jeff. And let me just reinforce what Ewout said about the businesses and just clarify that this is S&P Global businesses that we're talking about. We have no discussion whatsoever about the IHS Markit businesses.

But let me wrap up the call. And I want to thank everyone again for joining the call for your questions, for your support. I want to thank, again, as I always do, our very dedicated people. This has now been two years for the pandemic. We're going into our third year. We've asked our people to do a lot last year -- in the last two years. And we want to ensure that they're fully prepared for the expected merger with IHS Markit because we're going to be working really hard and running fast as soon as that closes.

And throughout 2021, we continued to perform, as you saw today, with the strong financial results and the progress on our strategic initiatives, especially those that are going to be driving growth in the future in Kensho, data sciences, data analytics, ESG, what we've talked about with investment in our global businesses. Going back to one of the first questions we received about the merger, we're very excited about the merger and the progress that we've been making, planning for the merger. We're going to host the call as soon as it's completed. We'll do a post-merger investor call. We can provide an update on the Company's strategy, the business segments, the synergies, the investment program, share repurchases, things that you asked about today or wanted to ask about today, and that would include guidance.

One last point I'd like to make on the call is, I want to thank Chip Merritt. He's been an incredible partner as our Head of IR. He's going to still be with us for a few more months until May. But for the past nine years, he's been a great partner. He's helped position S&P Global as the leading financial data and analytics and benchmark company and always with a great sense of humor. So Chip, thank you so much for your partnership throughout. We couldn't have never done as well we had without you.

So again, I want to thank everyone for joining the call today. We're very proud of all that we've been able to achieve, but we also have a lot to look forward to. So thank you, again, everyone.

[Operator]

That concludes this morning's call. A PDF version of the presentation slides is available now for downloading from investor.spglobal.com. Replays of the entire call will be available in two hours. The webcast with audio and slides will be maintained on S&P Global's website for one year. The audio-only telephone replay will be maintained for one month. On behalf of S&P Global, we thank you for participating and wish you a good day.