Earnings Call: Q3 2020

Oct 23, 2020

Earnings release

Good morning, ladies and gentlemen, and welcome to the London Stock Exchange Group Third Quarter Results. As a reminder, all participants are in listen only mode and the presentation is being recorded. Following the presentation, there will be a question and answer session where we will be taking questions from the conference call line. I will now hand over to your first speaker today. Paul Froud. Please go ahead. Thank you. Good morning, everyone. Thank you very much for joining us here today. It's the normal format. So on the call, we'll hear, first of all, from David Warren, the group CFO, who will talk through our third quarter results. And then we will hear from David Swimmer, the group CEO on recent corporate developments. And then after that, we will open up the lines for Q and a. So with that, let me hand you over to David Warren. Thank you, Paul, and good morning, everyone. Today, we have announced our 3rd quarter results, which show a resilient performance across the group against a challenging market backdrop. Total income for the quarter is up 2% to £600,000,000. And for the year to date, we are up 6% at £1,835,000,000,000. Gross profit after cost of sales is up 4% in Q3, and up 7% for the 1st 9 months of the year. Now within these headlines, let's mention a few highlights. Information services saw revenue grow by 1% to £223,000,000. And was up 4% on a constant currency basis, reflecting a weakening US dollar in the period. Recurring subscription revenues at FTSE Russell saw good growth with 4% on a reported basis, and 7% adjusted for FX as the business continues to work closely with customers to build new indices develop our data offering and partner to create benchmark linked products and derivatives based on our IP Asset Based revenue was down 7% in the period and down 3% on a constant currency basis, reflecting the lower asset values for some passive funds in the previous quarter. However, revenue was up from Q2 as the ETF market continued to recover from the start of the year. Real time data showed growth driven by non display licenses while other information was broadly flat. Moving on to post trade. Total income grew 5% on a reported basis £259,000,000 and was up 6% on constant currency for the quarter. OTC clearing revenues were 8% lower as we saw a quiet summer months at Swap Clear with reduced demand for rates risk compared to the same period last In contrast, we saw strong growth in non OTC revenues, up 11% across fixed income equities and derivatives. The performance at Unavista, our post trade reporting business, includes back billing revenue catch ups, growth, would be broadly flat, if we remove the one offs seen in Q1 and Q3. Net Treasury income continues to perform strongly, but as indicated at our interim results, collateral levels and returns were lower across the period compared to H1 and are expected to remain at lower levels. For q 4. Therefore, we maintain our NTI guidance, to be similar to H2 2019, assuming no change in market environment. Turning now to capital markets. Revenue was flat at £102,000,000 The period saw a good number of further issues and a third listing through the Shanghai London Stock Connect Growth in primary markets was offset by a reduction in secondary markets with lower equity trading activity as the market was subdued during the summer. Technology Services saw a reduction of £1,000,000,000 to 15,000,000,000 Nillian, sorry, for the quarter, but it's flat on, year to date basis for gross profit. And finally, cost of sales saw a 16% reduction in the period as a result of a 1 off benefit from Schwab Clear's revenue share agreement due to the high levels of income in the 9 months to date. Last year, this occurred in Q4, and we expect that there will be a further small benefit in Q4 of this year. So in summary, a resilient performance across the business in challenging markets. And with that, let me turn it over to David Schimmer. Thanks David. The Refinitiv transaction continues to progress well. We have received further merger clearances, including foreign investment clearance from the Italian government under Italy's Golden Power Law. In the summer, we ran a competitive process, which resulted in an agreement for the divestment of the entire Borcet Alliana group to Euronext for cash consideration of 1,000,000,000. We reached this agreement and the expectation that a divestment of the Borse Italian Group or part of it would be a condition to any European Commission clearance the Refinitiv transaction. And we believe this will contribute significantly to addressing the EU's competition concerns. I should note the sale to Euronext remains conditional amongst other things on the completion of the Refinitiv acquisition. We intend to use the proceeds to repay a portion of Refinitiv's debt, allowing us to return more quickly of 1 to 2 times net debt to EBITDA. On a standalone basis, the group has a strong financial position with over £715,000,000 of committed facility headroom available. LSAG's credit ratings from Moody's and S and P are unchanged at long term A3 and A, respectively. Following our announcement on the proposed sale of the Borce Italian Group, both ratings agencies have indicated this is credit positive, and S and P have reduced their potential downgrade to a single notch. We are also moving further ahead with preparation for Affinitive integration with, among other things, organizational design, well advanced, senior roles identified, culture, purpose, and strategy for the combined group developed, and plans for synergy achievement set out in detail. We are drafting a prospectus, which will contain more information, and we expect to publish it before the end of the year. In summary, we are making good progress on the highly attractive Refinitiv transaction and we expect to close in the first quarter of 2021. Before we turn to questions, as this is his last set of results, I want to express on behalf of El Seg, our thanks, and also my personal thanks to David Warren, in recognition of his significant contribution to the transformation and success of the group over the past 8 years. As CFO, David has led on many acquisitions, overseen the realization of resulting synergies and value creation, kept a tight control on costs and contributed to the strategy and development of the group. He has done so with his characteristic professionalism, hard work, resilience, humanity, and good humor. He has been a terrific leader of El Seg and a good friend to many here. David, I am sure that all on this call wish you all the best with your next steps. Thank you, David. Look, it really has been a great privilege to be, a part of this company over the past, 8 years. And to just really had the opportunity to contribute to, what's been remarkable growth and some significant accomplishments, and to work closely with you and, and my other colleagues, a really talented and, and dynamic management team. And I'd be very, very excited about the about Refinitiv future with Refinitiv and the the tremendous opportunities ahead. And and for those on the call, I wanna say thank you to you as well. I really appreciate, your continued support and interest, and very valuable, research we have had over the years. From our analysts. I've enjoyed meeting you and speaking with many of you, over over the past 8 years. So thank you. And I know that I leave, the role of group CFO in the in the very capable hands of Adamas. I know you'll have the chance to meet in due course. So thank you and, return it back to David. Thank you, David. Now let's move on to Q And A. So operator, could you please open the line for our first question? And we have the line of Haley Tampe for the first question from Credit Suisse. Line is now open. Good morning, gentlemen. Thank you for taking my questions. And congratulations, we'll also say to to David for moving on. My questions, since you're very mundane after all of that, but two questions are definitive, please, and one just on the post trade business. With Refinitiv, given you think the Botte Italian deal should significantly contribute to addressing the commission concerns and competition, Is there any comment you can give on some of the other actions you might be able to take or propose to resolve some of the vertical concerns that were raised by the commission. And the second question on just the debt refinancing given the S and P is reducing your potential downgrade to just 1 notch versus 2. Is there anything you can say to us about how that might affect the potential refinancing cost expectations for the percentage of debt you will take on. And then the question just on post trade was just on the non OTC revenues, which were very good. Year on year growth driver. I just wondered if you could give us any idea how much of that does actually relate to your Italian operations. I think MTS, for example. Thank you. Okay. So I'll I'll take your first question, and then, David Warren can address your your last two on the debt refinancing and post trade. With respect to, the of transactions and the approval process, we continue to engage with the, European Commission, I would say constructive engagement, ongoing dialogue and, not in a position to talk about anything specific with respect to, any of the other issues that might have been raised as part of the review, but we continue to make good progress and look forward to closing the transaction in the first quarter. David, you wanna touch on the the debt refinancing and the Of course. Great. Yeah. Sure. Yeah. Yes. Well, I appreciate your question on that. So, look, I think, I think that, first thing I would say is, you know, all of the arrangements we put in place with respect to the hedging, the bridge facility still remain very much in place. What we can actually achieve on the refinancing, will certainly depend on on market conditions at the time we are able to finance or refinance, we expect to go in with a mix of bonds as well as term loans. And having the right mix between, between euros and, and US dollar. I can't make any predictions, but I would just say generally that rates have remained low and are lower, than where they were when we announced the transaction, last in August of last year, as you as you all will know, as you follow the market. So, I think it's favorable, but, it would be it would be impossible at this point to pinpoint it any further than that. I think on your question of, the non LTC, it's clearly a mix of businesses, equities, fixed income and derivatives. We don't break out separately, the impact of, of, the Italian businesses, down to the asset class. But I think we have generally said that the impacts of, the impacts of of Borsa, on the, on the, on the future, Comco projections, and operations are are minimal, And I would focus people on the other asset classes, which are continuing to perform strongly, such as, such as equity current. Okay. Thank you very much. Your next question comes from the line of Philip Middleton from Bank of America. Your line is now open. Yeah. Thank you. And as one youngster to another, I'd like to again wish David all the best and thank you for all his help over the years. Just as I don't know what people are asking for that. Just, on a cup, just a couple of questions. First of all, on the debt side, do you still feel 1 to 2 times is the right is the right leverage for a company with the level of recurring revenues that you will have post Refinitiv, given that your peer universe following the transaction can take much more leverage than that. And secondly, this is much more minor, but coming back to what Bossa Italian disposal means for your business, one of the synergies you've always talked about was between the corporate services sales of Refinitiv and the companies you list. Now given that you'll be listing fewer companies and you thought, are there any implications there? Thank you. Yeah. Do you want to touch on the leverage and then I'll take the synergies. Yeah. So thank you. I mean, we've had the we've had the question before, and it's certainly one that, that we we have had under, under fairly constant review over the years. I think right now, we feel we feel like that is the right place to be. Because I think what it does is it it it definitely imposes a a good discipline on us, to, drive the benefits of the transaction to de lever aggressively, and to get ourselves back down into target range. It is certainly something that, is is continually under review, and I'm not gonna make any predictions for the future. I wouldn't do that if even if I was sticking around. But, but I think right now, we feel like it's the right place to be. We know that, that works well with the rating agencies. And to the extent that we are able to, delever quickly, maintain, get ourselves into it with a very strong balance sheet that definitely gives us, good, good, good capacity, for, for further growth. And, Philip, with respect to your question around any implications on synergies, there, there's a very modest impact on both the cost side and the, the revenue side in terms of, the Boris Italian and business, leaving the group, and having very modest impact on synergies. We do not feel it is a a significant enough, impact that it would require us to change any of our guidance around, either the cost or the revenue synergies. Okay. Thank you. That's very helpful. And your next question comes from the line of Andrew Coombs from Citi. Your line is now open. Good morning. It's Andrew from Citi. Just a couple of questions. Firstly, on the boss Italian proceeds, Can you just detail what your expectations are in terms of tax and fees on those proceeds? I, the net contribution and therefore, how much you expect to be able to pay down the debt? And then second question would be on the net treasury income. Held up slightly better than expected. Can you just clarify, have all the base rate cuts now fed through, I. E. Do you think this quarter is a fair base to extrapolate well? Thank you. Yes. Look, I think on the first question, I appreciate the question. It's not something, you know, we're still working through those calculations, and and, we we don't typically, disclose, a a lot of detail there, but when we're in a position to say more, as the transaction moves forward, we will say more in terms of what we do expect to be the, the net number that that would be available to us. So it's still something that we're working through, but, are in a position to disclose, at this point. I, I think our net treasury, we, we did signal at our at our interims, that, you know, we expected to see collateral levels come down from the elevated levels they were at. And we also expected, that the reinvestment yields would also come down. As some of the investments that we made in the first half of the year in a higher rate environment continue to roll off. That's still that's still very much the trend. We can't predict exactly how that will happen. So it has been, in certain areas. It's been a little bit better than than what we had, assessed at the half year. But as I said in my prepared remarks, we still we still continue to feel good about our NTI guidance, that for the second half of this year will be similar to what we achieved in the second half of last year. So we would that's what we'd expect for the full year. So fourth quarter will be a kind of a continuation where we are now, but, arriving at a total NTI for the second half of the year. That's pretty much, broadly flat to where we were last year in the second half. Very clear. Thank you and all the best, David. And your next question comes from the line of Arnold Dublak from Exane. Your line is now open. Hi. Yeah. Good morning. I've got a few questions, please. Firstly, if I can start with LCH, So clearly, I understand that, the banks take a lower revenue share of LCH revenues as a contribution increases there. I'm wondering, if you could maybe give us a bit of a feel as to what is the marginal share from here. What what marginal share of revenues do they take. So that's my first question. And, you know, I think, thanks for the clarification on an eye. So we should be expecting a quite a step down in Q4 and I if we listen to your guidance. And and my third question, sorry, is, is around Bosco Italianat. So on the on the divestments of of Bosco Italianat, Euronextel have highlighted the the possibility, down the line, to break to break a, the contract with LCA I'm wondering if that's something that you've factored in and what sort of the synergies that that could entail? Thank you. Yeah. David, maybe I'll take the the one on, LCH cost of sales. Yeah. And then, So I appreciate the question. Alright. There isn't these are, as we've said before, these agreements with this these agreements with the banks, are confidential. So, we have not in the past. It's certainly not gonna be giving any more sort of precise, information about the actual splits. But, I think the structure of this, the concept of this is that, as you, as you alluded to in your question, and I think you understand this, that we do receive a greater share of the revenues and are receiving the greater share of the revenues in the third quarter, given the activity levels that we've achieved, in the 1st 9 months. When we hit those activity levels, we do get a greater share of the revenues. You will you will see that without going into the specifics about the percentage of shares, obviously, you see that benefit in the cost of sales, line. So you saw that in Q3. Last year, it occurred in Q4, that, that, that change in, in, in, in sharing dynamics. So it was in the Q4 cost of sales, but, was really all part of the the overall, financial statements that we reported as part of the So I can answer I really can't answer your question specifically. But I just can tell you that that that concept is if we've reached a when we reach a certain level of activity, we are able, to get a greater share of the revenues. And good morning, Arnaud. With respect to your question around, the possibility of, clearing and breaking the clearing contract. So we do have a, clearing relationship with your next, constructive relationship, good working partnership. The existing contract runs through 2027. As, Stephan Lucia has mentioned, to the extent that they would want to try to change some of the, the clearing and make use of CCNG, for some asset classes that it doesn't currently clear. That would require some technology investment that would require changes in capital requirements. It would require some regulatory approvals And in addition to that, we do operate in an open access environment with, also with a lot of interoperability among the, various clearing options. So there is a a customer behavior or a customer choice element to this as well. So given all of those factors, we don't see this as a, a near term issue, and we look forward to working constructively with your next, in the coming years. David, if I can just follow-up When when you acquired LCH, Ernie was able to to launch their own clearing technology and, shifted quite instantly, actually, all the clearing volume. Could this be the case, with Euronet or or is it up is it really up to the clients to decide where they're carrying on on certain products? So it's it's It's a little bit different asset class by asset class, in terms of how some of the, the customer preferences will work. But also, there is a significant difference in that we have we have an existing contractual relationship There are are certain opportunities to, terminate that contractual relationship with substantial notice periods, etcetera. So this is not something that is going to be a, a quick change. Hope that helps. Thank you. And your next question comes from the line of Mike Werner from UBS. Your line is now open. One, just, on on the yield, the the sets yield, you reported, I think it was 0.76 basis points. Was the highest that we've seen, I think, in over 10 years. I was just wondering if you could provide a little color there, and if that's something we can expect, going forward, on a run rate perspective. And then second, just, I guess, a quick clarification on the clearing relationship for particularly between MTS and LCH. I was just wondering if there was anything contractual there, or again, this was just kind of more of a a client preference, Open Access relationship. And then finally, you know, we've certainly seen, revenue growth slow, a little bit this year at LSC versus, some of the growth rates that we have seen in previous years. I'm just looking forward as to the 5% to 7% guidance for revenue growth for the 1st 3 years of the combined LSE refunded of entity. I just wanted to see if that's, something that you're still very comfortable with. Thank you. Yeah. Maybe give it, I'll start. But, I mean, and on the, on the, on the, on the set, I don't have the answer to hand, perhaps, Paul does, or or we can just come back to you with it. Paul, what would what would be the proposal is? Okay. Can't. I think he's not, well, Paul may be muted. So why don't we just come back to you on that one? Okay. I appreciate the question. And then on, clearing and the, the MPS LCS relationship, that is, I I don't believe, and we we will come back to you if I'm getting this wrong, or or Paul, feel free to speak up if I'm getting this wrong. I do not believe that that is a contractual Ship. I believe that is a, a customer preference and a, I'll call it an asset class, driven destination, meaning that the the product, mainly the fixed income product that is coming off of MTS, LCH has particular, liquidity strength market presence in that area where it would make sense for customers to clear that product, within LCH, get the benefits of netting, etcetera. So that's a, a key driver there. And then on your final question with respect to, revenue growth targets, no change in our, in our guidance with respect to revenue targets or any of the other metrics that we put out when we, announced the transaction last August. So we continue to, feel comfortable with those targets. Thank you. I appreciate it. And your next question comes from the line of Chris Turner from Berenberg. Your line is now open. Yes. Good morning. It's Chris Turner from Berenberg. Just a couple of questions from me, please. Firstly, regarding the Information Services division, I guess we spend a lot of time talking about Footy Russell, but actually the strongest growth this year has come from your real time data business. You delivered 11% revenue growth there despite terminals falling 3%. So please could you provide some color on the types of firms applying that data? Why they are buying more, that data than in the past? And then perhaps if it's not too much of a stretch, you know, what that tells you more broadly about demand for data and data feeds, generally. And then secondly, the agreement that you've signed with Singapore Exchange seems actually to be quite broad in scope. Could you perhaps share some of your strategic thinking behind that partnership, and then specifically in terms of the timing, I know Singapore are due to lose their MSCI indices early next year. So is that the kind of time frame we should think about having these sorts of rustle alternatives up and running, or will it take a little bit longer than that Thank you. Okay. Thanks, Chris. I'll perhaps I'll take the first one. Look, we are pleased with, with the growth we're seeing in real time data. We've had a really, we've had a good, new business performance there. You know, there certainly are some there, there certainly are some new customers here But a lot of this is, our ability now to, because we are increasingly shifting away from terminals as the, as the primary method of delivery and pricing, to an enterprise license where more of the information and the data products that are being requested, that are being supplied, are going in, into our customers through feeds that has been and continues to be a very growing trend. So given the way we're now distributing the data, gives us the opportunity to broaden out the range of products that we're able to distribute. So a lot of this is responding to new demand coming from existing customers, as well as some new customers. So been again, good growth in, in, in non display data, And also, I think the ability to capture omni opportunities that are now available to us, with enterprise packages now shifting away from, from terminals to a more enterprise license approach to each customer a lot more flexibility for us to customize delivery, enterprise accordingly. So this is clearly a trend we're seeing. And as we've talked about in the past, it's very similar to the trends that, we're seeing at Refinitiv And we think also very much a part of the trend going forward, that, that customers will consume data and analytics in a variety of distribution channels that are beyond the desktop. They're gonna be They're going to be in the cloud and then be through partnerships. They're going to be through feeds, and that is, that's a very important part of the opportunity we now have with Rupiniti Thanks, David. And then Chris, good morning. I'll take your question on the Singapore relationship, FTSE Russell has a strong relationship with Singapore, the Singapore exchange as we do with a number of other exchanges around the world. I think it's, as you know, very well, it's one of the strengths of our open access model, and working with partners, who can use our our products. In August, we did enter into a long term strategic agreement with the Singapore exchange for the development of really comprehensive, Asian and emerging markets focused multi asset index derivatives products. The, I should just mention the FTSE China A50 derivatives, which are traded on Singapore exchange, have seen strong quarter over quarter growth in Q3. It's up over 50%, to, I think, something along the line of 29,000,000 contracts traded. So we do have a lot of confidence in our offering. We have a lot of confidence in that relationship. And to your specific question, in terms of the timing of, rollout of new product that is in process. And a great example is the launch you launched over the summer, the Putsi Taiwan index futures, on SGX. That's grown over 3 months to be trading over a $1,000,000,000 per day, and over 1,100,000 contracts traded to the end of September. So, a good sign there and more to come in that space, I would say, can't give you specific timing on, product rollouts, but more coming there. So hopefully that, that addresses the question. Yes, that's very clear. Thank you both. And your next question comes from the line of Ian White from Autonomous Research. Your line is now open. Hi, good morning. Thanks for, thanks for being the call. I'll just add one question, please. I know just that some of your peers exiting the regulatory reporting business on the grounds that it basically has questionable economics for them. Why is the group better positioned than those appears to remain in the regulatory reporting business, please? Yeah. David, you wanna Yes, sure. The regulatory reporting space is one that, as you know, over the last few years, the regs have changed quite a bit, a bunch of our peers or competitors got into that space in response to some of the regulation over the last few to several years. And, for some of them, they just have not achieved scale or it has not been a a productive, use of capital, and, we can't comment on others' decisions to exit but I think it is not surprising that given the, the competitive dynamic and given, the number of players did originally go into it. It does feel as if that space is consolidating a little bit, which is probably a healthy consolidation. So we feel comfortable that, the business, we think, its results are solid, and, we got no, no plans with respect to our own, our own business. Thanks. And your next question comes from the line of Johan Sorman from HSBC. Is now open. Good morning, everybody, and thank you, David, for all the helpful discussions, to be honest from HSBC. Two questions that I have left. So it's not all, previously, you were targeting double digit growth in revenues. Now you're, seemingly happy with 4%. What has changed in reviews? And secondly, I have to come back to the MTI, from the LTH. How much are you playing the how much consideration mismatch, which was so far successful? Will this run down or, do you expect to increase it over the next year's to to keep a healthy level of NPI from this business. Thank you. Sure. So I would, I wouldn't necessarily agree with, premise of your question, nuclear, that we're satisfied with with 4% on a reported basis. That's certainly where it is. We're pleased that, pleased that that business, I think this year that business, as we said, at the beginning of the year, in terms of new sales, was going to be in a bit of a challenging environment. Particularly in the first half of the year, and we talked about that in our Q1 call. But we're pleased to see that business, continuing to build. There certainly are some FX effects on this business on a reported basis, but if we look at it like for like sequentially, we're very pleased with the growth, but pleased with, the work that we're doing on, new product development. We're pleased with the work that we're doing on strengthening our research analytics, and Salesforces. So, continue to feel very good about that business. Sort of a difficult market right now, I think, to make, future decisions. But we did talk about, a shift where we were going to move more from more from a sales model to a customer partnership model. And we're very pleased with how that progress is going. We're rolling out a number of new products in in, in ETFs, in ESG. We've got a number of good research projects going on. So we're we're we're very pleased with the development there. And we definitely have strengthened both the leadership as well as the, the people working in our areas of research. Sales and, and product development. So, overall, I think pleased with that and definitely see it as a as a continuing growth business, but I think in this market, difficult to say. But I would certainly bring you back to the point that sequentially it has been building, this year, again, a very challenging environment. I think the second question you asked was around NCI. Look, I think on NCI, this is really not about, about reaching for yield. We we earn NTI, as you know, through, early 2 plays, about 2 thirds of our NTI. Is really basically a fee handling charge, if you will, which is, which is the, the, agreed the overnight rate that we agreed to return to our customers minus, an agreed spread. Which is kind of a handling charge. We then can earn, depending we we then can look to invest that but that's invested in, as you know, secured highly liquid short term products, that are through 30 days, 60 days, 90 days, So whatever we can earn on that goes as an addition to that. So this is not a situation where we, in any way, look to take yield. We're not about have to manage this with very tight risk parameters, around liquidity and investor concentration. So really, we have, we have made good strides, I think, in terms of expanding the range of counterparties, and the, and the investment opportunities that we can, that we can have, for placing this cash, consistent with our, with our risk, with our risk parameters. And we'll continue to do that. But it is not something where we're going to be, looking to do anything we're not going to do anything different on the yield environment. We're going to take opportunities that present themselves, with different instruments in different markets but very consistent with our risk parameters. Thank you. And your next question comes from the line of Kyle Boyd from KBW. Your line is now open. Hi. Thanks for taking my questions. Just two questions for me. First is on Varsatalliana, made it clear that the the potential divestiture would happen after the retinitive deal closure and those proceeds would go towards debt repayment. So assuming no other remedies are required by the European Commission, is it also fair to assume that you will not be exercising that 2,500,000,000 equity to cash consideration swap that's available at the Refinitiv deal closure? 2nd question, just on the on on Refinitiv, you've given given an update on the cost plan, which seems to be progressing pretty well. Just considering or just wondering if you could provide an update on those conversations are going, on the revenue side with alternative customers to potentially migrate, pricing more towards enterprise fees. Sure. I think I can say pretty pretty cleanly, as we've made it clear in our announcements, we expect to use the proceeds to reduce Refinitiv debt. So no expectation at this point that we would use the the term that you referred to in our contract in terms of, reducing, the, you utilizing that 2,500,000,000 bucket you will. So no no expectation that we'd be using that. And then on the Sorry. Remind me your second question was around just on on refinitiv and the, there an update on how their, the migration of pricing towards, more towards enterprise fee waived systems and a demo basis. Sorry. So that that, process is, ongoing. And as we had mentioned, when we talked about this in the past, this is a, really, a customer by customer conversation, and Refinitiv continues to, have those conversations with their customers as they work through, new contractual relationships, and particularly in this environment where a number of the customers are, are also feeling the challenges of the environment, that kind of, model, is continuing to get good reception. So we're not in a position today, especially given we haven't, even closed on the Strand Jack transaction to give, more specificity or more color on that or any particular contractual agreements with their customers, but that, approach continues to gain traction. And our last question comes from the line of Bruce Hamilton from Morgan Stanley. Thanks. And, yeah, thanks, morning, guys, and congratulations. To to your TFO. Two questions. Just following up on the debt, the the reduced sort of debts, that you're likely to to bear on the Refinitiv deal. Sorry, I met Mr. Earlier, but can you give any indication on the improvement on the credit rating that you expect at least one notch better? Should we expect that, you know, 30, 40 bps lower on sort of blended cost of debt going forward? And then secondly, given that we think your on our calculations, your net debt leverage will be comfortably in your range probably by year 2. How should we think about the, you know, ability to you know, do further substantial strategic moves. Would there be too much of a limitation on management bandwidth given the integration of the Refinitiv deal? Or, you know, would you feel past that point after, say, 12 months of just trying to think about, obviously, we may be jumping the gun given, you know, sort of closed this deal, but thinking ahead, how quickly will will you move on to think about other sort of, strategic options beyond? Yeah. I think well, thanks, Bruce. I think maybe I'll answer the first one and it's probably more appropriate for David to answer the second one. But, but we're obviously we're obviously, we obviously note, the the report that, S and P put out, And, you know, if we are able to, achieve a rating, on the new Comco credit of a, of a low single a rating, obviously, that's favorable. You can do you can certainly do your own analysis about credit spreads between a BBB plus and an A minus but I think, and I think as I said in response to a question, related question that I got in this earlier, rates are definitely favorable. I think we've said in the past, that we had assumed, I think there was, I think the Refinitiv, debt had assumed in our modeling about 6% We had assumed for our initial modeling somewhere in the range of 3%. The market has definitely improved. Lower from a yield perspective, from a, the yield and rates perspective now than it was back in August of 2019. So directionally, it's all positive. Bruce, but I think until we actually get into the market, and test different maturity levels and different mixes of currencies, we're not going to really know and also the mix between fixed and variable. But just directionally, it is definitely favorable from where our earlier projections have been. And on your second question, Bruce, the year, obviously correct. We'll, if we use the proceeds to pay down refundative debt, we'll get closer to our our target range more quickly. We have committed to, our investors and to the rating agencies that we want to do that as a priority. Having said that, a couple other things, we have we have a lot to do as part of our refinitive integration, and we will be very, very focused on that. But we also have to keep our eye on, the outside environment. So, We are, I think we will be pleased when we are, in a position with lower leverage that we can, continue to consider strategic options. But to the extent that we do consider anything, we will apply the discipline that you have seen us apply in the past, and we'll be very focused on attractive returns, situations that make sense from a strategic perspective. But again, none of that is near term urgency. We are very focused on bringing down our debt, very focused on executing on the integration. But we will have that optionality a little bit sooner in the future. And there are no further questions at this time. Mr. Paul Freug, I'll turn the call back over to you. Great. Thank you very much. That was the last question. Let me just thank everybody on the phone lines. Thank you for your questions. Thanks for those joining on the webcast as well. And finally, thanks and congratulations to David on the completion of your last quarterly conference call. For everyone else, please do reach out to IR team if we can be of any more and join the course of today. Otherwise, we're gonna end the call now. Operator, back to you. Thank you very much. And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.