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S&P Global to set up ratings business in China, updates '18 outlook

S&P Global Inc. is planning to establish a domestic credit rating agency in China, where it currently only rates bonds issued offshore by Chinese entities.

"China's bond market, with an estimated USD $10 trillion in outstanding debt securities, is expected to grow as more corporate financing shifts from loans," the company said in a press release about its 2018 investor day, taking place May 24.

In a recent interview with The Wall Street Journal's CFO Journal, S&P Global CFO Ewout Steenbergen said that the financial information company's expansion into China would either be done through the purchase of a domestic credit ratings firm or by establishing its own presence there.

S&P Global also updated its financial outlook for 2018 after the settlement of its significant financial crisis litigation. It widened its 2018 GAAP operating profit margin guidance to 44% to 45% from an earlier guidance of 45% to 46%. The GAAP earnings per share outlook was lowered to $7.75 to $7.90 from $7.95 to $8.10. The adjusted EPS outlook of $8.45 to $8.60 was unchanged.

The company said it expects to generate around $100 million of run-rate cost savings over the next three years as it implements its new productivity savings programs. These savings will come mainly from productivity improvements across support functions, real estate and digital infrastructure.

S&P Global announced select annual financial targets over a period of three to four years, including organic revenue growth in the mid- to high-single digits and adjusted EPS to increase by low double digits.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.