Our activities

Web site : http://www.fitchratings.com/

Fitch Ratings is a global credit rating agency committed to providing the world's markets with independent, timely, and prospective credit opinions. With 50 offices worldwide, Fitch Ratings' global expertise, built on a foundation of local market experience, spans across capital markets in over 150 countries. Fitch conducts analysis of the credit markets covering Corporate Finance (including Financial Institutions and Insurance), Structured Finance, Public Finance, and Global Infrastructure and Project Finance.

Fitch's ratings and research products and services offer the debt capital markets an opinion on the relative ability of an entity or a transaction to meet financial commitments, such as interest payment, repayment of principal, insurance claims or counterparty obligations. Fitch's credit ratings are used by investors worldwide as an indication of the likelihood of receiving their money back in accordance with the terms on which they invested.

In addition to ratings, Fitch offers fixed income research, analytics, data, pricing and valuation services, and training under the Fitch Solutions brand.

SIGNIFICANT EVENTS

For Fitch Ratings, fiscal 2010 marked the return of stability and confidence in the business as many of the unknowns in the credit and regulatory environments subsided.

Credit trends that drove global markets were visible in Fitch Ratings' performance. Debt issuance, a key driver of Fitch's revenues, was strong as improved conditions in corporate and government debt issuance provided a counterbalance to the challenges that remain in restarting securitization markets. Corporate and financial institution issuance continued to lead the market, with both high-grade and high-yield issuers benefiting from historically low interest rates and increased investor demand. In many countries around the world, stimulus spending increased activity in government debt markets and promoted project finance. In structured finance, some increased activity was seen in consumer finance receivables such as credit cards and autos. Despite some signs of progress, a new industry construct for securitizing mortgages has yet to emerge.

Financial reform in several major markets produced important legislation clarifying how the role of rating agencies will be addressed in the aftermath of the financial crisis. This was an important development for Fitch and one that signified increased stability for rating agencies. In the US, for example, months of debate culminated with the passage of the Dodd- Frank Bill which, among many other things, expands the role of the Securities and Exchange Commission (SEC) as the regulatory authority for credit rating agencies. In Europe, the newly-formed European Securities Markets Authority (ESMA) was designated as the pan-European regulator for credit rating agencies.

Fitch has been an active participant in many of the debates helping to reshape financial markets and has consistently stressed that the market will benefit from a balanced and globally consistent approach to the regulation of credit rating agencies. As regulatory regimes have changed, Fitch has continued to evolve a multitude of policies, standards, and procedures both at its own initiative and to reflect various new rules and regulations.

In fiscal 2010, Fitch also made organization changes to further enhance the independence and analytical oversight of the rating agency. Paul Taylor was named as President of Fitch Ratings. Mr. Taylor, who reports to Fitch Group CEO, Stephen Joynt, is directly responsible for all rating and research activities. Fitch also named a new Chief Credit Officer and Chief Compliance Officer.

Fitch's primary focus is ensuring that our credit policies and processes are as robust as possible, facilitating the development of timely and insightful credit opinions and research. Given this, Fitch continued to review the analytical frameworks and criteria used to develop its credit rating opinions and, where necessary, made appropriate changes to strengthen them. Fitch Ratings also works closely with Fitch Solutions to introduce complementary data, analytics and tools that provide investors with additional insight.

Fitch Solutions

Fitch Solutions delivers fixed income products and services to the capital markets. Its product offerings include Fitch Ratings' research delivery, risk and performance analytics, surveillance tools, structured finance workflow solutions, and pricing and valuation services. The division's service offerings include Fitch Training, a specialist training firm for finance professionals.

Fitch Solutions continued to enhance its product offerings throughout fiscal 2010. For example, an integrated data service was launched to meet growing user demand for a single, customizable feed platform covering data across the Fitch Group, including credit ratings, CDS pricing, market-based risk signals, and fundamental data. A series of enhancements were also made to Fitch's research web portal that improves usability as well as content management. In addition to continued product enhancements, Fitch Solutions is focused on maximizing the distribution of Fitch content via leading third party channels.

FINANCIAL REVIEW

Fitch Ratings generated revenues of $657.2 million during the 2010 fiscal year, a 7.8% increase from $609.8 million for the prior year. After translation into euros, its contribution to consolidated revenue came to €487.5 million versus €450.2 million for the previous period, an increase of 8.3% on a reported basis and 6.3% like-for-like.

Revenue derived by assigning ratings to new entities, new fixed-income obligations and by monitoring previously issued ratings totaled $550.4 million, a 7.4% increase over the prior year. Strong revenue increases in the Corporate Finance business, driven by favorable issuance trends, offset revenue declines in Structured Finance, where activity remains limited.

Revenue from Fitch Solutions increased 9.4% in 2010 to $106.7 million due to factors such as an increase in research subscribers from major banks and asset managers; increased demand for data feeds to support compliance needs; and increased demand for credit market training. Fitch Solutions' main source of revenue is its subscription and research business, which enjoys a strong, recurring revenue stream.

Recurring operating profit was $195.5 million, representing an 11.7% decrease from fiscal 2009 due to increases in compensation and professional fees as Fitch returns to a more normalized business environment. Translated into euros, recurring operating profit decreased 11.3% on a reported basis and 10.5% like-for-like.

Revenue by geographic region

• North America
Revenue from North America was $275.5 million in fiscal 2010, up 8.4% over the prior year. The increase in revenue was largely attributable to strong issuance activity by corporations and financial institutions. In particular, many issuers took advantage of the low interest rate environment to raise capital and refinance existing debt. Global infrastructure and public finance also saw revenue increases as issuance was supported by the US fiscal stimulus. Despite the overall increase in revenue in North America, structured finance revenue declined due to a weak securitization market.

• Europe, the Middle East & Africa (EMEA)
In the Europe, Middle East & Africa (EMEA) region, revenue was $250.8 million in fiscal 2010, a 1.8% increase. Declines in revenue in the structured finance sector were offset by increases from the corporate finance sector where companies are increasingly substituting bank loans for bond issuance coupled with the attractiveness of raising capital at low interest rates. Strong issuance from emerging markets and growth in issuance of covered bonds also modestly offset some revenue contraction in the region.

• Asia Pacific
Revenue generated from the Asia Pacific region was $78.3 million in fiscal 2010, an increase of 13.8%. Robust economic growth across the region coupled with strong investor demand for higher yielding investments drove issuance activity, particularly within corporations and financial institutions.

• Latin America
Revenue generated in Latin America was $52.6 million, an increase of 29.6% in fiscal 2010. All asset classes saw increases due to strong local market debt issuance, particularly in Brazil. Corporate Finance and Financial Institutions recorded the largest revenue increases.

Fitch Solutions
Revenue from Fitch Solutions totaled $106.7 million, an increase of 9.4% on a reported basis. Fitch Solutions' main source of revenue is its subscription and research business, which enjoys a strong, recurring revenue stream.

MARKET SHARE AND COMPETITION
(Source: Fitch Ratings)

Fitch Ratings competes with other credit rating agencies, on a local and global scale, along with investment banks, brokerage houses, asset managers, and independent research firms that offer credit research, analysis, and opinions. Its largest competitors in the global credit rating business are Moody's Investor Service ("Moody's") and Standard & Poor's Credit Market Services ("S&P"), a division of The McGraw- Hill Companies, Inc.

Fitch Ratings' market share of global debt issuance, measured in terms of dollar issuance volume, stood at an estimated 68%. The table below lists global market share for the individual sectors where Fitch is an active player.

(Source: Fitch Ratings)

Fitch Ratings' scope

Fitch Ratings currently maintains coverage of approximately 6,000 financial institutions, including over 3,500 banks and 1,400 insurance companies. Finance & leasing companies, broker-dealers, asset managers, managed funds, and covered bonds make up the remainder of its financial institution coverage universe.

Additionally, the agency currently rates more than 2,000 corporate issuers, 100 sovereigns, 200 subsovereigns, 300 global infrastructure ratings, and 46,000 US municipal transactions. It also maintains surveillance on over 6,500 US, 1,300 European and 800 Asian structured finance transactions.

FISCAL 2011 OUTLOOK

Fitch's analytical and research capabilities continue to be widely valued by market participants. Its performance in fiscal 2011 will be dependent on continued improvements in macroeconomic and capital market conditions. Such factors include bond market issuance activity, credit conditions, interest rates, and GDP growth.

Fitch Ratings and Fitch Solutions will remain focused on meeting the evolving and increasing ratings, research, and analytical needs of issuers and investors.