Credit rating agencies have not had it easy lately. Investors have been fretting about the US subprime mess slowing demand for collaterised debt ratings. More broadly, fears have spread since the beginning of last year of a deterioration in pristine market conditions in other segments – leaving agencies with less new debt to rate. To top it all off, there is the Credit Rating Agency Reform Act passed last year – originally dubbed Credit Rating Agency Duopoly Relief Act in the US Congress.

However, none of this has yet left much of a mark on performance at Moody’s and McGraw-Hill, owner of Standard & Poor’s, the second duopolist targeted by US politicians. First-quarter operating profits were up 38 per cent year-on-year at S&P, largely reflecting strong ratings growth, and 28 per cent at Moody’s.

Both argue that the breadth of their offering should give some protection from troubles in any particular area such as residential mortgage-backed securities in the US. Many of the structural factors that have boosted growth also remain intact, including the ever greater number of complex debt instruments and the growing reliance of corporate borrowers from outside the US on capital markets.

Meanwhile, Moody’s and S&P seem to have succeeded in neutralising the immediate threat of new rivals. Their lobbying of US Congress and the Securities and Exchange Commission has paid off with a set of rules so onerous that few new rating agencies look set to qualify, much less start driving down profitability. The bigger risk may be greater litigation exposure under the new regime. And with both Moody’s and McGraw-Hill still trading at a sizeable premium to the broader market, it may not take much of a slow down for their shares to appear overrated.