Good morning, and welcome to S&P Global third quarter 2018 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. If you need any additional technical assistance, please press star zero and I will assist you momentarily. I would now like to introduce Mr. Chip Merritt, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.
Good morning and thanks for joining us for S&P Global's earnings call. Presenting on this morning's call are Douglas Peterson, President and CEO, and Ewout Steenbergen, Executive Vice President and Chief Financial Officer. This morning we issued a news release with our third quarter 2018 results. If you need a copy of the release and financial schedules, they can be downloaded at investor.spglobal.com. 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 contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. Before we begin, I need to provide certain cautionary remarks about forward-looking statements.
Except for historical information, the matters discussed in the teleconference 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 U.S. Securities and Exchange Commission. 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 are 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 Jason Feuchtwanger at 212-438-1247. At this time, I would like to turn the call over to Douglas Peterson. Doug?
Thank you, Chip. Good morning and welcome to today's earnings call. The benefit of our diverse portfolio of exceptional businesses was evident this quarter as we were able to overcome a decline in global bond issuance and deliver revenue growth, margin improvement, and EPS gains. We continue to believe that the fundamental drivers of long-term issuance remain strong, namely global GDP growth and a solid debt maturity pipeline. However, we have always cautioned that there will be months or quarters when issuance weakens enough to cause a decline in ratings revenue. It happened this quarter. The negative impact on issuance from U.S. tax reform, combined with economic uncertainty from Brexit, trade negotiations, emerging market concerns, and rising rates, resulted in a 7% decline in global issuance and a 5% decline in ratings revenue. Despite these headwinds, the company delivered great financial results.
For me, the most important highlight from the quarter was a significant improvement in adjusted operating profit margin. This is a testament to the continued efforts across the company to emphasize top-line growth while installing lean processes and automation projects. We're working to increase the level of financial discipline across the company and raise the technology acumen of every employee, not just software engineers. This effort is paying off. In addition, Market Intelligence and S&P Dow Jones Indices each achieved 10% revenue growth. Our revenue growth margin improvement and lower rate from U.S. tax reform combined to generate adjusted diluted EPS growth of 23%. We generated $1.4 billion in free cash flow year to date, excluding certain items, an increase of 24% over the first nine months of last year.
The $1 billion ASR that we began in March was completed. We're initiating a new $500 million ASR over the next few days that will be completed no later than early February of next year. Consistent with our return of capital philosophy, we expect to return $2.16 billion in 2018 through share repurchases and dividends. We're particularly pleased that both Fitch and Moody's upgraded our credit rating, recognizing the transformation that has taken place at the company over the past few years in the portfolio of businesses, improved profitability, and increased cash flow generation. We continue to keep abreast of startup activity in our space and invested $15 million in ESG and technology-related companies that I'll cover with you in a moment. Turning to the third quarter financial results, despite the decline in ratings revenue, total revenue increased 2% and adjusted operating profit increased 11%.
This led to a 380-basis point improvement in adjusted operating profit margin to 49.6%, our best quarter ever. These gains, combined with a lower tax rate from U.S. tax reform, generated adjusted diluted EPS growth of 23%. The impact of U.S. tax reform has been positive for the company, it has, as we expected, been a drag on issuance. In fact, the 15 U.S. companies with the largest overseas cash balances at the end of 2017 issued $126 billion of debt last year. Among those companies, Coke is the only issuer so far this year. They issued an $800 million bond in the second quarter. If this absence of activity persists in the fourth quarter, which we expect it will, these 15 companies alone will account for a roughly 10% decline in U.S. corporate issuance this year. Of course, this trend extends beyond just these 15 companies.
Global issuance decreased 7% as the weakness in corporate issuance exceeded strength in the structured market. In the U.S., issuance declined 16% as investment grade decreased 24%, high yield declined 45%, public finance decreased 6%, and structured finance was unchanged with declines in CMBS offset by gains in ABS and CLOs. In Europe, issuance increased 18% as investment grade increased 15%, high yield declined 12%, and structured finance increased 46% with strength in every category except CMBS. In Asia, issuance declined 9%. Since much of this is made up of local Chinese debt that we currently don't rate, this decline is not meaningful to our results. I think that it's important to put third quarter issuance into perspective as there could be misperception on the street that third quarter issuance was abysmal.
As you can see in this chart, the level of issuance remains high, higher than most of the quarters in 2013, 2014, and 2015. While it declined versus the third quarter of 2017, it's still a healthy level of issuance. We shared the next two charts with you a year ago. I think it's important to remind you that the vast majority of issuance is routine, not opportunistic. That means that we generally have a steady stream of debt that needs to be refinanced. This chart depicts that the majority of the U.S. investment grade debt is issued for general corporate purposes and refinancing. It's also interesting to note that the material increase in debt financed M&A since 2015 as investors have become more comfortable with blockbuster offerings. In addition, issuance for buybacks and dividends increased in 2015 and 2016, but has since tailed off.
This is likely due to the impact of U.S. tax reform on cash repatriation that I discussed a moment ago. If we take a look at U.S. high yield issuance over the same time frame, you can see that once again, opportunistic issuance associated with M&A, LBOs, buybacks, and dividends make up the minority of issuance. You can also see that the high level of high yield bond issuance is declining. In the past, we have noted that leveraged loans have gained share versus high yield bonds because investors generally prefer floating debt in a rising interest rate environment. The company has updated its 2018 issuance forecast and initiated its 2019 forecast. For 2018, the company now expects issuance, excluding international public finance, to decrease 4%. This is slightly lower than the July forecast of a 3% decrease.
The areas with the greatest decline continue to be U.S. industrials and U.S. public finance, both primarily due to U.S. tax reform. For 2019, excluding international public finance, issuance is expected to increase less than 1% with the current global themes of U.S. tax reform, economic uncertainty, and the withdrawal of economic stimulus continuing. Investor appetite for floating rate debt is also a driver in LBO financing. As you can see, the level of U.S. leverage loans backing LBOs has increased markedly over the past several years. This has been somewhat at the expense of high yield bond market. A recent example is Blackstone's financing of its investment in Thomson Reuters. This was financed with $9.3 billion of leveraged loans and only $4.3 billion of high yield bonds.
While our revenue from high yield issuance is declining, bank loan rating revenue has been a source of growth over the past few years, but moderated in the third quarter at $73 million, its lowest quarterly level in over two years. During the third quarter, opportunistic issuers, a catalyst in recent quarters, were largely sidelined amid higher spreads. Private equity firms were undeterred, however, providing a large quantity of LBO supply, as seen on the previous chart, even as other M&A volume floundered. Structured issuance has been a source of revenue growth for the past year and a half. There are two dynamics that impact this. The first is positive, as the level of outstanding loans continues to grow. This is depicted in the light blue bars. The strong credit growth is supported in part by low unemployment and GDP growth.
With credit standards healthy, the consumer is both spending and borrowing, which is a good thing for the economy. In fact, from an overall credit standpoint, it is worth noting that the ratio of household debt service payments to personal income remains below 10%, whereas it was above 13% just before the crisis. Offsetting this is the decline in a measure that we call securitization utilization. This is the percentage amount of outstanding loans that are securitized. This is depicted in the dark blue line. The second quarter marked the first increase in over 10 years, from 12.8% to 13%. We continued to develop new products and invest in unique content and technology during the quarter. We purchased from CME their 27% stake in Trucost. Trucost has become an integral part of our ESG efforts. In addition, effective October 1st, we have transferred Trucost from S&P Dow Jones Indices to Market Intelligence.
We think this is a better fit as we continue to build out our ESG capabilities. We estimate that the full year 2018 revenue and operating loss associated with Trucost will be $9 million and $5 million, respectively. We made additional investments of more than $15 million in new technologies. The first was an investment in Xpansiv, an early-stage company transforming energy production information into what they call Digital Feedstock to securely track vital source data. The way energy is produced and shipped will directly influence its value in the marketplace. The second was an investment in FiscalNote, a technology innovator at the intersection of business and government. It helps organizations manage the state, federal, and international policy and legislative issues that affect them most. Platts launched daily price assessments for West Texas Intermediate Midland and Eagle Ford 45 on a Delivered at Place basis in Rotterdam and Augusta.
These assessments are intended to address the wave of U.S. imports into Europe. The rise in U.S. exports over 2.2 million barrels a day over the last two and a half years has created opportunities not only for sellers of U.S. crude, but also a diverse set of buyers around the world. The Government Pension Investment Fund for Japan, GPIF, the world's largest pension fund, has selected two new carbon-efficient indices launched by S&P Dow Jones Indices as the benchmark for their ESG investment strategy. The S&P Global Carbon Efficient Indices are designed to reduce exposure to high carbon companies in a systematic way, while maintaining a risk-return profile similar to that of their benchmarks. This quarter, we celebrated another important milestone as ETF AUM associated with our indices surpassed $1.5 trillion for the first time.
Through a combination of asset inflows and market appreciation, we surpassed $500 billion in 2013, $1 trillion in 2016, and now $1.5 trillion. This is truly a remarkable achievement, an important contributor to the growth and success of S&P Dow Jones Indices. Now I'd like to turn the call over to Ewout Steenbergen, our CFO, who'll provide additional insights into our financial performance. Ewout?
Thank you, Doug, and good morning to all of you on the call. While Doug discussed the revenue growth, adjusted operating profit margin expansion, and EPS gains, I would like to touch on a couple of other items. First, we had a 25% reduction in our adjusted corporate unallocated loss. This was primarily the result of efficiency programs, which included a reduction in excess real estate costs in N.Y., a reduction in IT spend, and less spending on professional fees. Second, there was a 600-basis point reduction in the adjusted effective tax rate, primarily due to U.S. tax reform. While we continue to realize stock-based compensation tax benefits, they were significantly lower than the third quarter of 2017. In fact, the third quarter of last year recorded $0.13 more EPS from this line item because there was an extraordinary level of stock option exercises in that quarter.
We expect $0.13-$0.15 of positive EPS benefit this full year. Changes in foreign exchange rates had a modest negative impact on revenue in the ratings business, and a positive $18 million impact on adjusted operating profit for the company, or $0.05 a share of EPS. Our expenses were positively impacted by the weakening of the Indian rupee, Argentine peso, and Australian dollar. There were a number of non-GAAP adjustments to operating profit this quarter. We incurred an $11 million lease impairment associated with exiting space in N.Y. and Princeton, New Jersey. We took a $9 million restructuring charge in Corporate and Market Intelligence. These first two items should generate approximately $11 million in annual savings. We recorded $11 million in Kensho retention-related expenses.
We had $33 million in deal-related amortization. We reduced the provisional tax charge associated with U.S. tax reform that we recorded in the fourth quarter of 2017, and this resulted in an $8 million after-tax benefit that we are excluding from our adjusted results. This quarter, we recorded great revenue growth in both Market Intelligence and S&P Dow Jones Indices. In addition, we delivered substantial adjusted operating profit margin improvement in every business segment. While revenue growth is a fundamental driver of margin expansion, that is just part of the story. We have implemented a level of financial discipline and rigor that has and will continue to have a major impact on margins.
While we have made great strides in improving the company's adjusted operating profit margin over the past several years, we continue to execute on a multitude of restructurings, lean initiatives, office space optimizations, and technology projects that continue to advance the profitability of the company. Now, let's turn to the segment results, starting with Ratings. The decline in issuance that Doug discussed resulted in a 5% decline in Ratings revenue. This is the first quarterly revenue decline that we have reported in Ratings since the first quarter of 2016, when we reported a 9% decline. Nevertheless, we reported a 13% decline in adjusted expenses, resulting in a 1% increase in adjusted segment operating profit. The expense reductions were primarily from lower incentive compensation accruals, as well as successful efforts to decrease headcount through attrition and restructuring actions.
This contributed to a 430 basis point improvement in the trailing four-quarter adjusted segment operating profit margin to 55.9%. Non-transaction revenue increased due to growth in fees associated with surveillance and frequent issuer programs, as well as inter-segment royalties from Market Intelligence, partially offset by lower Ratings evaluation services activity and CRISIL revenue reported in U.S. dollars. Transaction revenue decreased due to debt issuance reductions, lower bank loan rating activity, as well as a challenging comparison to the 24% growth recorded in the third quarter of last year. I thought that it would be useful to put this quarter's non-transaction revenue into perspective. You can see that this is a very steady source of revenue. This is because the majority of the revenue is subscription-like. However, there is some volatility as some components, namely Ratings evaluation services, ebb and flow with M&A activity.
This slide depicts Ratings revenue by its end markets. The largest contributor to the decline in Ratings revenue was Corporates, primarily as a result of U.S. tax reform that Doug discussed earlier. Financial Services delivered a 21% increase in the quarter as issuance was particularly strong in companies that are not part of frequent issuer programs. Structured declined slightly with revenue weakness in Europe, and Governments decreased 13%. While the CRISIL and other category was flat, it included an increase in inter-segment royalties from Market Intelligence, offset by a decline in CRISIL's dollar-denominated revenue. Market Intelligence delivered a strong quarter with organic revenue, excluding revenue from Panjiva and RateWatch, increasing 9%. With adjusted expenses up 5%, adjusted segment operating profit increased 20% and the adjusted segment operating profit margin increased 300 basis points to 36.3%, a new high point.
This improvement contributed to an increase in the trailing four-quarter figure of 130 basis points to 33%. Risk Services grew 13%, with RatingsXpress providing the greatest level of growth as we continue to expand the data feeds portion of the business and had a timing benefit associated with a contract renewal. Data Management Solutions realized 11% revenue growth, once again, benefiting from expansion of the data feeds business. Desktop, the largest category, grew 6%. Beginning in the fourth quarter, we will be integrating Trucost into Market Intelligence. Market Intelligence has a lot of ESG activity underway, and we believe the business is better suited to be included here. We have added Panjiva content to the Xpressfeed platform, and this will allow our customers to receive data feeds on a spectrum of unique global trade activity data sets. We also continue to develop the Market Intelligence platform.
An updated version was released this quarter with significant content, feature, and performance enhancements. The initial beta release of a Kensho-driven search capability was introduced. This initial step included improved keyword and topic search to generate more relevant responses. We continue to work to convert the remaining Capital IQ desktop customers to enterprise-wide commercial agreements. In some cases, we are waiting for multi-year contracts to come up for renewal. More importantly, after converting the large accounts, we are now addressing a multitude of small accounts, which is labor-intensive. We realized a 12% increase in active desktop users. Turning to S&P Dow Jones Indices, the segment delivered 10% revenue growth, 4% adjusted expense growth, and 13% adjusted segment operating profit. This led to an adjusted segment operating profit margin of 66.2% for the quarter, and on a trailing four-quarter basis, 66.4%, increases of 190 and 170 basis points respectively.
The business garnered 40% of ETF industry inflows during the quarter, as the U.S. continues to attract investment versus the rest of the world. To put this into perspective, S&P Dow Jones Indices has about a 28% market share as an index provider to global ETFs. With ETFs based upon our indices receiving 40% of the industry inflows, that's a very positive outcome for the business. Strong revenue growth during the quarter was driven by asset linked fees and data and custom subscriptions. Asset linked fees increased primarily due to increased AUM in ETFs and mutual funds linked to our indices. Data and custom subscriptions increased due to organic growth, a catch-up in real-time reporting that we discussed in the second quarter, and Trucost growth. Exchange-traded derivatives revenue increased 2%, with mixed derivatives activity at the exchanges. $ in ETF AUM.
A year ago, we were at $1.2 trillion, and we have since seen $149 billion of inflows and $142 billion in market appreciation. While quarter-ending ETF AUM is an important measure, our revenue is tied more closely to average ETF AUM, which increased 23% year-over-year. Industry inflows into exchange-traded funds were $113 billion in the third quarter, similar to inflows in both the first and second quarters of this year. Exchange-traded derivatives volume was mixed during the quarter. S&P 500 index options activity increased 12%, VIX futures and options activity decreased 42%, and activity at the CME equity complex increased 2%. Having witnessed the equity market volatility in October, exchange-traded derivatives volume in the fourth quarter is starting off very strong. Now, turning to the final business segment. Platts delivered steady revenue and margin growth.
Revenue increased 5% as a result of a 6% increase in core subscriptions, partially offset by a decline in Global Trading Services. Adjusted expense declined 3% due to reduced incentive accruals and the timing of investment costs. Global Trading Services third quarter revenue improved sequentially versus the second quarter, which was down 6% versus prior year, due mainly to weaker trading volumes in certain gas oil and fuel oil markets. The impact from the transition away from high sulfur marine products is reducing exchange-traded derivatives activity. We are positioned to launch several low sulfur marine price assessments in early 2019 that may assist the market in this transition. The third quarter adjusted segment operating profit margin increased 440 basis points to 50.3%, contributing to a 70-basis-point gain in trailing four-quarter figure to 48%. This chart shows quarterly Global Trading Services revenue since 2016.
This quarter was the highest quarterly revenue since the third quarter of 2017. While this chart illustrates volatility from quarter to quarter as the underlying trading volume fluctuates, GTS does provide a constant revenue contribution to the Platts business. We have frequently discussed our efforts in iron ore, agriculture, and LNG, citing a number of acquisitions and product launches over the past few years. These efforts are clearly paying off as Platts delivered superior revenue growth outside of the petroleum market, further diversifying the revenue base. Power and gas, petrochemicals, and metals and agriculture each realized 8% revenue growth in the quarter. Turning to our balance sheet. Since funding the $1 billion ASR in March, our cash balance has continued to build.
Our adjusted growth leverage to adjusted EBITDA is holding steady at 1.9 times, well within our targeted range. Free cash flow, excluding certain items, increased 24% year to date. This is due to revenue growth, improved working capital, and lower taxes. In addition, we completed the $1 billion ASR and received a final delivery of approximately 600,000 shares. This is in addition to the 4.5 million shares received in the first quarter when the ASR was initiated. The ASR was completed in September. Since that time, we have been in the market repurchasing shares every day through a 10b5-1 program. As Doug mentioned, we will initiate a new short-term $500 million ASR over the next few days. We also paid $126 million in dividends during the quarter. Consistent with our capital return philosophy, we expect to return $2.16 billion through share repurchases and dividends for the full year.
I would like to turn to our 2018 guidance. Guidance figures reflect current spot market Forex rates. Based upon our year-to-date results and the expectation for the rest of the year, we have updated our previous guidance. This slide depicts our prior and current GAAP guidance with any changes highlighted. Here we have our 2018 adjusted guidance. Corporate unallocated has been decreased to a range of $155 million-$165 million to reflect better-than-expected progress on cost reduction programs. Our EPS guidance is tightened to a range of $8.50-$8.60. We are reducing our capital expenditures to approximately $120 million. Finally, we are decreasing our free cash flow, excluding certain items, to approximately $2.2 billion due to timing associated with delayed cash collections.
In summary, the benefit of our diverse portfolio of exceptional businesses was clearly evident as we delivered solid and resilient financial results for the third quarter. Efforts continue to further build the company with innovative products, margin-enhancing technology projects, and continued investments in unique data analytics and content enhanced through technology. With that, let me turn the call back over to Chip for your questions.
Thanks, Ewout. Just a couple instructions for our phone participants. To indicate that you wish to ask a question, please press star 1 and record your name. To cancel or withdraw your question, simply press star 2. I would kindly ask you to limit yourself to 2 questions. That's 2 questions, in order to allow time for all other callers during today's Q&A session. If you've been listening through a speakerphone but would now like to ask a question, we ask that you lift your handset prior to pressing star 1 and remain on the handset until your question has been answered. This will ensure better sound quality. Operator, we'll now take our first question.
Thank you. This question comes from Hamza Mazari from Macquarie Capital. You may ask your question.
Thank you. This is actually Mario Cortellacci filling in for Hamza. Could you talk about the potential benefits you think we could see from excess capacity in your Market Intelligence segment being freed up, particularly the 350 or so relationship managers that were tied up with the SNL integration and enterprise-wide contracts?
Just make sure you're clear on the question. The premise is that we've got a bunch of sales folks that are tied up in the SNL integration?
Yeah. I think just looking for some clarity there.
Well, good morning. This is Ewout. Let me give you some perspective on this. First of all, the integration of the SNL and Cap IQ organizations we have behind us, that has happened over the last two years. You should see that if you look at some of the synergy benefits that we have announced by year-end 2017, there was a bit of excess benefits of synergies that would still come in during the course of this year, but that is mostly behind us as we speak. We believe at year-end last year, we were at about $88 million run rate synergies, and by the end of this year, $105 million run rate synergies. That is coming in, and you see that in the margin expansion of Market Intelligence.
Specifically on the sales force, actually, there has been a large transition of the sales force of Market Intelligence over the last year with a new sales force model where there is a group that is more focused on relationship management, and there is another group that is more focused on new customers. They are investing in the sales force. We're expanding the sales force, and we're seeing the benefits in renewal rates, in relationship management, and relationship satisfaction with the customers of Market Intelligence, as well as the number of new customers that we can attract to our platform. We're continuing with that program, and we see the benefits showing up in the results as we speak.
Okay. That's helpful. Just a quick question on the Platts business. Could you remind us what your strategy is longer term to add more analytics to the Platts revenue base? Maybe you can update us on the size of the analytics as part of Platts, and not too sure if that still stands at 10% or give me some color there.
Thank you, Mario. This is Doug. As you know, the Platts business has always been very strong in its pricing business, and in particular, in the petroleum area. We've had a strategy to diversify Platts in a couple of different ways. One is geographically, where we can continue to build out our position in Singapore and London, in Dubai, really critical global commodity hubs. A second part of our strategy is adding in alternative data sources, and data and analytics. We're well along the way, having purchased a couple of years ago, companies like PIRA, and added them into the portfolio. Off the top of my head, I know somebody here can tell me what is the percentage of analytics revenue. It's around 10% that you cited, 8%. It is an area that we're pursuing. It's very important for us.
One of the benefits we're getting from closer collaboration across all of S&P Global is that we can use the platform and some of the data and technology skills that we have in market intelligence to help drive and grow that business.
Thank you so much. Go ahead.
Oftentimes you'll hear us say the 10% figure. That particular 10% that we frequently mention has to do with the derivative trading. Of course, that's the trading activity that takes place at ICE, and Singapore with iron ore. That's when we refer to roughly 10%. That's what we're referring to with 10%.
Got it. Thank you so much.
Our next question comes from Alex Kramm from UBS. You may ask your question.
Hey, good morning, everyone. Doug, I guess, would love for you to give a little bit more color on the 2019 issuance forecast. One thing in particular, I think you and your peer, and quite frankly, ourselves, I think, have highlighted how the refinancing wall next year should be up significantly from what we saw at the beginning of the year for this year. In your slide yourself, you're talking about how refi is a big component, and there's a lot of recurring. I'm surprised to see the corporate issuance forecast for next year down. Maybe you can flesh out the disconnect a little bit. It seems like 2019 should actually be pretty nice relative to 2018, but something seems to be missing. Any color.
Yeah. Good. Thanks, Alex. First of all, as you saw the global forecast up around 1%, about 0.6% precisely, it has a couple of different components. We see the financial services sector, given refinancing, growth of balance sheets, capital positions, et cetera, growing at around 5%. We also think the U.S. public finance market, despite having been very weak this year, based off of maturity schedules that are going to start kicking in, that that will be up 10 or 11% or so. Structured finance around flat. That leaves you with the corporate, so-called industrials and corporates down around 4%. What are the components of that?
You take what you just mentioned, which is a strong maturity pipeline, which in particular kicks in in the second half of the year, and you offset that with one final year, I think it's at least six months, maybe a little bit longer, of the impact of U.S. tax reform. We've been looking at this very carefully, and we're trying to get our hands on, and waiting to get our hands on final third quarter numbers from balance sheets across the United States. Just to give you a couple of points, the offshore cash for the top 50 U.S. companies was over a trillion dollars, and that has finally started decreasing. That's gone down by about $80 billion between the first and second quarters, and a little bit into the third quarter.
When we look at the issuance of that top 50 group of companies, the top 15 have really not been to the market yet, and they still have very strong cash positions, which whether it's overseas or offshore, onshore, doesn't matter. They have not really gone back to the markets. We're encouraged to see that when you get below the top 15, there has been market issuance. We have started seeing companies come back to the market as they've come up with strategies, either whether it's acquisition strategy, it's stock repurchases. This is one of the factors we'll watch very closely. It's really that cash balance which we see starting to decrease. As I said, that $80 billion of decrease, about 10% down in the first half of the year, as that start going off the balance sheet and being utilized as well as the strong pipeline.
There still are some of those very large companies that we do not see them in the pipeline anytime soon, raising debt, and that does have an impact on the corporate number.
All right. Great color. Thank you. Maybe just secondly, very quickly, on the non-transaction side in ratings, maybe this is for Ewout, but thanks for the color there, why that's been slowing. I think the last three quarters sequentially, it's been declining. Are we kind of at a good run rate from here, or could there still be further declines or anything else that would swing that higher? I guess it's difficult to see, but any color would be great.
Good morning, Alex. What we said the last two quarters was that every element of non-transaction revenue was going in a positive direction, and that was pretty unusual. We had surveillance going up, we had new issuers going up, and we had rating evaluation services going up in the first and the second quarter of this year. If you look at the third quarter, there were two elements that were not going up. Rating evaluation services did not go up, and that is normal course. This is some activities around M&A where advisory is provided, rating evaluation services activity is provided, and that can go up and down quarter by quarter. The other element is we are reporting the revenue of CRISIL in this particular category as well.
If you look at an INR basis, revenue of CRISIL was up. Due to the weakening of the INR in $ denomination, the revenue of CRISIL was down. Those were the two elements. I would say the last two quarters were more the exception in terms of positive trends of non-transaction revenue. I would call this more a normal quarter, what we have seen during the third quarter.
Very good. Thank you very much.
Thanks, Alex.
Our next question comes from Toni Kaplan from Morgan Stanley. You may ask your question.
Hi, this is Jeffrey Goldstein on for Toni. You announced at your Investor Day new cost initiatives that you thought would help achieve $100 million-$150 million of run rate savings. I was curious, are we starting to see that in the quarter, which is what helped margins? If so, how much of that $100-$150 have you done? If not, when should we see the majority of those savings begin to flow through?
Thank you for recognizing that. We are very pleased with the progress we are making. Of course, that was a big driver behind the very strong margin expansion that we're able to report for the quarter. If you look at the expense reductions, we would say that approximately half of that was coming through the incentive accruals, and the other half was more or less due to our efficiency programs, and that showed the structural expense reductions that we should see in the future as well. If you look at the progress of our efficiency programs compared to what we announced to you during our Investor Day in May, I believe that we're slightly ahead of where we expected to be at this point in time.
We're making good progress with real estate rationalization, standardization and automation of our processes, restructurings, data center rationalization, competitive sourcing, reducing complexity of the organization, and so on and so forth. There's many initiatives going on, and we're very pleased with the progress we are making so far.
Great. That was very helpful. Just given the weaker quarter for issuance, I was hoping to revisit what you consider the most favorable issuance mix across your products. In terms of operating leverage within Ratings, what products do you feel like you get the most leverage and would ideally like to see these products be more stable, but maybe there's some more choppiness elsewhere? Thanks.
Yeah, Jeff, this is Doug. As you know, there's different types of issuance, and we get different types of fees. We have a certain set of U.S. issuers which are on frequent issuer programs that if they're not in the market, we're not seeing the transaction revenue comes from that. To your point specifically, in the U.S., structured finance and high yield are areas where we typically have higher fees compared to the size of the transactions or compared to others because they're usually complex, they're one-time deals, and they then involve surveillance through the life of the transaction. Typically, volumes in structured finance and high yield are where you'd see higher leverage in our top line.
Thanks a lot.
Our next question comes from Manav Patnaik from Barclays. You may ask your question.
Thank you. Good morning, gentlemen. Doug, thank you for the initial 2019, I guess, ratings forecast you guys are putting out. I understand it's obviously hard to predict these things, but maybe if you could just help reiterate the sort of little more multi-year view on why you remain constructive on issuance, especially in this sort of period of fear where everyone thinks you're top of cycle and things are going to roll. I was just hoping you could help provide a little bit more color on why you guys remain positive there.
One of the things that we look at, obviously, as you know, is global growth. Global growth continues to be very strong. Despite a little bit of a slowdown in China, that's not going to hit the global economy because the Chinese market slowed down a little bit to 6.5%, but it's now the second largest economy in the world, and that growth is still absolutely massive. The U.S. economy grew in the second quarter at over 4%. It looks like the third quarter is going to continue to be strong, and our expectations for growth into the U.S. market are still in the 3% range, dropping a little bit below that into 2019 and then dropping a little bit more in 2020. We see strong growth.
We see continued corporate finance activities through M&A, through corporate restructuring, through corporations that are managing their balance sheets very effectively. Let me just give you some numbers from the maturity schedules over the last couple of years. This isn't up to date at the end of the quarter. This is about a quarter out of date. We know that in 2019, there's a maturity already on balance sheets of slightly below $2 trillion, which is $200 billion higher than it was this year. In 2020, that jumps up another approximately $200 billion. It's kind of flat into 2021 and then goes up another up to almost $2.3 trillion in 2022. When you look at the maturity pipeline that's already out there, that's on balance sheets today, and you know that some of that gets pulled forward.
Once it gets pulled forward, it goes back into maturity pipeline. We see that this increase over the next couple of years of, it's about 5%-10% if you look out over time of what is the maturity schedule. We take that along with economic growth, with restructuring, with M&A, et cetera, and we build that into our forecast. Our short-term forecast, as you saw, this is preliminary. This is the first draft of this. When we come back in February with our fourth quarter and full year earnings, we will give you an update on this. You saw there's a strength in financial institutions and U.S. public finance with some slowdown in industrials and corporates, but we know we've identified exactly where that's coming from, and we'll dissect that further as we get the cash balances for the end of the year.
Okay. That's super helpful. Maybe, Ewout, if I could ask you a similar question. I'm just thinking about the desktop side of the Market Intelligence business. I mean, 5% is a growth number, but it has been decelerating. How much of that is just some of this noise in you guys shifting to enterprise contracts? How much of that is industry headwinds? Just hoping for some more color there, please.
Yeah. Good morning, Manav. Overall, we are very encouraged what we see in Market Intelligence. We are growing market share, we are growing our desktop revenues, we are growing our user base. We're seeing the contract values going up high single digits, which is a very important indicator for future revenue growth. We are going through this transition to enterprise-wide contracts that will help to drive users going up, active users. What we call active users are users that have more than 100 clicks per month. These are very active users that go into our system multiple times per day or per week. Overall, higher user growth will lead to higher usage growth.
Higher usage growth of our platform will mean we are more embedded in models, we are more embedded in workflows, and overall, there's only, in the future, positive things that come out of that. Actually, we are very encouraged, and we believe that we are, on a relative basis, doing well in the desktop markets today.
All right. Thanks, guys.
Thank you.
Our next question comes from Jeff Silber from BMO Capital Markets. You may ask your question.
Thank you so much. I know you don't give specific margin guidance by segment, but I'm just curious on the Ratings segment. Would we be able to continue to see operating margin expansion in the face of what you've already seen in terms of debt issuance declines, at least continuing for the next few quarters?
Jeff, if we look at Ratings margins, we have given aspirational margin targets during our investor day. What we said is that we expect margins of Ratings, that we would be able to bring those up over the next three years to a level of high 50s. High 50s. What you see is that we're making good progress in that direction. On a trailing four-quarter basis, we are still not there yet, but we're making a good progress, and the trend is definitely going fast in that direction. We are currently at 56.5% on a trailing four-quarter basis. We will be able to continue on that trend. Definitely positive. We are thinking that margin expansion in a period where you have revenue decline is very positive, because once revenue growth comes back, you are continuing with those higher margins.
in fact, we would be continuing with margin expansion at that point in time. You're not giving back on your margins. That will only mean that the economic value in the future, when we see revenue growth again in Ratings, will be very strong. Therefore, we think this is a good trend.
All right. Then just a quick numbers question. In terms of your adjusted EPS guidance for this year, what share count is embedded considering all the share repurchasing you've been doing? Thanks.
Yeah. Obviously, we cannot give you that number because we would give indications of our share buyback activities, we would not be permitted to give that information to the market for obvious reasons. You have seen what is the average share count that we have published at this point in time, I think you know the other components of the calculation. The $2.16 billion of total capital return we are doing this year, $500 million approximately is dividends. You know how much in share buyback we have done so far year to date, you know what is the new $500 million ASR that we'll put in place over the next few days that will run into somewhere February of next year. I think you have all the components that you probably can get quite far in making that calculation.
All right. Fair enough. Thanks so much.
Our next question comes from Dan Dolev from Nomura Securities. You may ask your question.
Hey. Thanks, guys, for taking my question. If I understood this correctly, the FX, the Indian rupee, and the other currencies, the FX impact was actually a net positive, correct? Because of the cost.
That is correct. On a total company basis, we have an exposure, what we call a negative exposure, in Indian rupee, which means higher cost in Indian rupee than revenues. When the Indian rupee is weakening, the dollar-denominated expense base will see a benefit, and therefore, overall, that is a positive for the company's results.
Correct. That's what I thought. If you look at the fourth quarter, I think the trends have actually worsened. The Indian rupee depreciated year to date by about 11%. That seems to me like there's an increased EPS benefit. Just to put it in perspective, the reason you're not embedding it into the guidance or raising the high end, is that just conservatism?
The way how you have to look at this is the following. We run foreign exchange hedge programs to mitigate the effects of FX movements in the main currencies where we have exposures around the world. If there would be a negative impact of foreign exchange movements, the hedge program should mitigate that and make that impact smaller. If there will be positive impacts on the company, the other way around, also those will be mitigated. Overall, you're right. If the Indian rupee is continuing to weaken, that should be a benefit, but it is a mitigated benefit because our FX hedge programs move in the other directions and are offsetting this partially.
I wouldn't say if you are doing modeling for the fourth quarter, don't take too much of a large number into account for that, because again, this is a mitigated effect that overall will be reflected in the company's results.
I understand. Thank you. Then my follow-up is on headcount. I believe in the last quarter, in 2Q, you provided a very detailed headcount assessment across the segments. I think it was down 1%-2%, say, in ratings. Can you maybe give us a sense of how much of the margin benefit, I don't know if it, maybe in ratings, is coming from reducing headcounts? How do you ensure that you're cutting people without hurting the product? Thank you.
Yeah. If we look at headcount numbers, we will provide you an update probably at year-end, then we're planning to do that on an annual basis, not on a quarterly basis. It's fair to say that the expense improvements in ratings, I would also say in all other segments and in corporate, are due partially to efficiency programs, putting technology in place, and therefore also the impact on headcount. We don't know exactly the allocation, but I said before, approximately 50/50 would be the impact from lower incentive accruals versus the efficiency programs and the benefits from efficiency programs. We're of course monitoring very closely that we are also reinvesting in the business, that is very important.
You may recall a slide that we showed you during Investor Day, where overall, we're slightly reducing the investments and the overall spend in technology, but there was a very significant shift from the spend in business as usual technology towards new initiatives and innovation in technology. We're looking at all of those elements, and we're continuously trying to reinvest in the business as well. A part of the efficiency program flows through to the bottom line and a part we are reinvesting. There are certain elements in expense reductions, like efficiency in our office space leases, in other areas, that of course, are clear benefits and have nothing to do with headcount. There's also a lot of those efficiency programs that are not headcount related and are in other areas as well. I hope that provides some additional color.
It does. Thank you very much. Appreciate it.
Our next question comes from Peter Appert from Piper Jaffray. You may ask your question.
Thanks. Good morning. Doug, the margin performance obviously has been pretty impressive for the last several years and certainly in the current quarter. I'm wondering, where you see, maybe on a segment basis, the biggest remaining opportunity for margin improvement in the portfolio?
Well, I'm going to think out loud a little bit. Across the portfolio, as you've heard me say before, one of our biggest opportunities in expanding margin is through commercial activities, through continuing to get out to see our customers, to drive growth, to sell products, to listen to the market on where they have new ideas or where they have gaps that we need to fill. I'm very encouraged that across the company, our businesses have all taken on an aggressive commercial approach to being out with the customers to understand what they need. If I think about that, generally speaking, that gives us, obviously, continued growth, top-line growth in all of the businesses with Platts developing their new markets and their ability to do the analytical products, with Indices developing new products like the one we highlighted now with GPIF, with the ESG indices.
This is one of the areas where we're going to be pushing hard for margin expansion. Obviously, Indices, when it comes to margin expansion, at some point, I don't know how much more you can expand on the kind of margin that we already have. Potentially in the long run, there might not be as much upside there. But in our planning cycle over the next three years, we think that all of the businesses have some room to expand to the margins that Ewout has outlined earlier, the ones that he outlined in our Investor Day.
Okay. Thank you. On China, can you just give us an update on the efforts to get into the local ratings business? Has that been potentially delayed in the context of some of the issues currently?
Well, when we go to the China market, we've got a couple of different initiatives going on, where we have a license that we filed to start a rating agency, we've made great progress there. We started hiring people. We have a legal vehicle. We have a head of the business. Right now what we can do, we are working on very hard to build out a foundation for launching that business. Simultaneously, we're also investing in China through our market intelligence data products to be able to provide information about financial players, climate data, et cetera. We see China as a very slow investment.
I think we've said before, we don't see this as something that's going to be creating a lot of growth in the near future, but we want to be in China in the long run because of the size of the market. It will become the largest capital market in the world at some point. As their currency gets more integrated into the global currency markets and their financing markets get more integrated, we see this as absolutely critical for us. No tangible business has started from our local initiative with the rating agency, but we'll keep giving you updates as it progresses.
You did get the license?
We have not received the license yet.
Okay. Got it. Thank you.
Our next question comes from Craig Huber from Huber Research Partners. You may ask your question.
Yes, hi. I have a similar question to Peter. I have another one. For China, what is your best expectation when you would get the license to be able to participate in that market? How aggressive, once you do get that license, do you think you might be putting personnel in place there to start rating in the domestic market?
First of all, we already have a team on the ground in China, which has been doing ratings for dim sum bonds for years. We already have a team on the ground. We have also commercial people on the ground. They've been focused on global issuance and global information. I don't have an estimate for when we're going to get our license. Once we do, we'll be ready to move, because we're getting it set up so that we can move quickly when we do get the license. I don't have an estimate for when that will come through yet.
Also the acquisition you did of Kensho in March of this year, as you think out, I guess, to 2019, 2020, where should we expect the greatest improvement in your products so the customers see that and maybe it could help you on the pricing side and also the sell-through of volume of your products, but also just importantly on the cost side, what segments do you think might benefit the most as you think out the next couple of years, please?
Craig, we are very excited about the opportunities with Kensho and all the projects that are currently underway. There are projects underway in all of our businesses. We already mentioned during the prepared remarks the Omni Search and how that is developing. That's really a very large initiative. The entity linking, we mentioned two quarters ago about Crunchbase, but there's other now private company data sets and other data sets that we are linking through the algorithms of Kensho. We're thinking about the whole data ingestion and linking that we are doing, workflow management. We have Kensho Labs, where we are testing new initiatives on the market intelligence platform, the Event Almanac. We have predictive distress models that are in relation to ratings. We have initiatives going on with Platts, particularly unstructured data and linking that to our price assessments. There's initiatives going on in all of our businesses.
I wouldn't really focus specifically on one segment versus the other. Of course, a part of those initiatives will deliver efficiency opportunities for the company. We believe, we truly believe that Kensho ultimately will help with revenue growth because these opportunities with Kensho deliver new innovative products and services to the markets. We believe the time to market will be better, the quality of the products that we'll deliver will be better, and we can think about new products that we could not think about in the past. Overall, Kensho will help with a faster top-line growth, some efficiency programs and some efficiency benefits. Overall, we believe this will be a benefit we will see across the board within the company.
Great. Thank you.
Thanks, Craig.
Our next question comes from Joseph Foresi from Cantor Fitzgerald. You may ask your question.
Hi. My first question is on your assumptions. What are your assumptions for interest rates in GDP built into those 2019 issuance assumptions, and where could you see the most volatility? I guess I'm wondering what happens if interest rates rise, but that causes GDP to slow.
Joseph, this is Doug. The assumptions that we have built into that right now is for a GDP growth in the U.S. of about 3%, in Europe at slightly below 2%. This is an initial forecast. We will come back in our February phone call with a forecast, which is going to be based off of the fourth quarter issuance as well and what we see going on in the pipeline. As you recall, we have looked at Europe as an area that we want to see more growth in the United States. In Europe, we've been looking for the capital markets to become more active. We saw that in the last quarter, which is actually positive for us to see the European markets start picking up with so much economic activity as well as capital market activity.
I think that for us, these are the numbers that are built in there now. I'd look at it as a very first draft preliminary call, and we'll give you more details next quarter.
Okay. For my second question, we've done a lot of work on our side on AI and the opportunity for data analytics going forward. What the result has been is that we found that the people who own the data are probably in the best position. The algorithms have been around forever. In that context, maybe you could talk about how you think you can monetize, I know it's early stages, the Kensho acquisition, and what you can do with the data, even if it's just one example, going forward. Thanks.
Yeah. Our philosophy is very aligned. We believe that data will be more and more commoditized in the future, and that the cost to analyze data will come down very rapidly with the advancements of technology. It's all about making sure you have a first-mover advantage. You have the right quality of individuals with unique capabilities and insights in your organization to make sure that you're most advanced compared to anyone else in the industry.
That is exactly the overall strategic rationale why we did the Kensho acquisition, because it will help as an accelerator, as a catalyst of the transformation of S&P Global as a whole, to be a very fast-moving, nimble, agile company that is very much thinking about new models, what we can do with new data sets, unstructured data sets on top of our existing structured data sets that can help and supplement human intelligence with artificial intelligence. A combination of all of that will mean new products and services that we can provide to the market. We very much believe in that philosophy. We very much believe that that is the direction where the markets will be going, and that is exactly the strategic rationale why we are so pleased to have Kensho as part of S&P Global today.
Thank you.
Our next question comes from Shlomo Rosenbaum from Stifel. You may ask your question.
Hi, thank you very much for squeezing me in over here. I want to go back first, probably first question, to just the question that was asked a little bit beforehand in terms of the lower headcount in Ratings. I understand Ratings to be essentially a people-based business. If you could just, Ewout, maybe talk a little bit more about where the cost savings are coming from. You talked about attrition and some of the restructuring actions. Is it really headcount reductions, or is it more of consolidating real estate and other things like that? Just trying to, again, follow up on potentially reducing headcount in what is a headcount-driven business.
Yeah, let me give you a little bit more details on this. Last year, we announced two restructurings in Ratings. One was in the sales organization, the other was in the analytical organization. This was really to change the organization's effectiveness. For example, I had two commercial organizations in Ratings. We moved this into one, and it's now a more effective organization, and we could particularly, at the higher, more management level, take some reductions. In the analytical situation, the same. We have made some organizational changes to the operating structure, created some efficiencies in the way how that's operating, have a more effective organization. Those are two of those announcements we have done in the past.
I think what you are seeing now is the benefits of those that are coming in, as well as the benefit from all the technology investments that we are making. In Ratings, there's a lot going on with respect to technology. You have heard us speaking in the past about Project Simplify, which is about standardization of workflows. Now we have that in place. Now you have standardized workflows. You can put automation in place, and that is helping with, again, the efficiency and the effectiveness of the Ratings organization. In fact, Ratings is making a lot of investments in this area. They have a great data science group that also is looking at a lot of new commercial opportunities in Ratings based on technology to date.
Those are the main drivers behind the benefit that we're seeing in ratings, and we expect to continue to see those benefits in the future because this is very much part of the philosophy and where we want to bring the company in the future. The benefits of those technology investments, we expect to continue over time.
Okay. Thank you. Just for my follow-up, there's a lot of talk about the impact of the cash overseas on the largest companies. The thought seems to be that when they burn through that, we'll start to see issuance over there, it will drive issuance in the market. I want to know if you've done studies on, frankly, the cash below that level in terms of EBITDA-defined leverage can stay the same, but with the tax reform, companies have a lot more cash flow. If we're not seeing an increase in leverage throughout the economy, what you're essentially seeing is that increased cash flow is being used to drive investments as opposed to debt. Have you kind of analyzed the impact of that on future issuance?
What I can tell you is that what the point that you just made is something that we've been looking at. I can't give you something that is statistical or scientific that we've done on that. Anecdotally, looking through the top 50 companies in the U.S. that we've gone through, they have been reducing their cash. They've been using it for a combination of activities, probably most importantly M&A and stock buybacks. Those are the two largest usages of cash. As I mentioned earlier, if you get below the top 15 of those that really do have very large amounts of cash, once you get below the top 15, those companies have started coming back to the markets, including Walmart, that did a $16 billion issuance in the second quarter. That was a very large issuance, other companies have been coming back.
To the extent that your question is something that I would need to go back to our team to get a more thorough answer to you, something that, given you've asked that question, we'll go back and take a further look at that.
All right. Appreciate it. Thank you.
Our next question comes from Vincent Hung, from Autonomous. You may ask your question.
Hey. On Risk Services, it looks like revenues were up 7% sequentially. Can you just give us some more color on that increase?
Yes, we are seeing a lot of positive traction for our products in Risk Services, particularly on the data feeds. We are seeing that data feeds in Risk Services are doing well, as we see also, by the way, in other parts of our business. There was a particular one-time catch-up effect in that line item as well. Overall, a positive trend. The RatingsDirect, RatingsXpress, and the new Risk Services products that we're putting out in the markets are having overall positive traction.
Got it. Just lastly, on those top 15 cash-rich companies that you're talking about, wouldn't the majority of those be frequent issuers?
Probably. It's most likely given they're U.S., they're large, and they're the kinds of companies. Actually, some of them were not. It's interesting if you go back, just to give you a little bit more color. Some of them, like Apple and Microsoft, Alphabet, had not really been issuers up until the last few years. If you recall, we coined the term synthetic repatriation, where in 2015, 2016, and into 2017, they were doing large issuance. As opposed to bringing back cash from overseas, they were using large issuance at the insistence of shareholders and potentially their management and their boards to deploy cash and investments in the U.S. or also buy back stock. They were large issuers in 2015, 2016, and 2017, while they simultaneously held a lot of cash overseas.
I think that those 15 top issuers are kind of a special case that we're going to have to watch carefully how do they end up eventually balancing out their offshore cash, onshore cash issuance, et cetera. I think they're kind of in a case of their own.
Thanks.
Our next question comes from Patrick O'Shaughnessy from Raymond James. You may ask your question.
Hey, good morning. Just one from me. SEC Commissioner Jackson recently gave a speech in which he spoke of the SEC's mandate to encourage competition throughout the capital markets landscape. One of the areas that he specifically mentioned was credit rating agencies. In addition, there's a fixed income market structure SEC meeting next week where they're going to be looking at the role of credit rating agencies. What level of concern do you have regarding the renewed push to regulate rating agencies in the U.S.?
Well, Patrick, first of all, we already are heavily regulated. We've been going through this process for about since 2006. More specifically, really from around 2011 after the Dodd-Frank provision started getting rolled out. We maintain a very active, very positive, constructive relationship with the SEC as well as the policymakers in Congress on the different finance committees that oversee this. We watch this very carefully. We think we have a really good story when it comes to the way that regulations have been implemented across the entire industry. The seriousness with which the industry has taken that, the kinds of practices that have been added in and formalized. Many of those practices we had before, but they're much more formal. I think there is a competitive market out there. We compete head-to-head every day with really tough, high-quality competitors. We welcome them.
Thank you.
We will now take our final question from Tim McHugh from William Blair & Company. You may ask your question.
Morning, it's Trevor Romeo in for Tim. Thank you for squeezing me in as well here. Just quickly on the index segment. The AUM growth was 23% in the quarter, but the growth for asset linked fees was a bit lower at 11%. Could you just talk about what's driving the disconnect between those two growth rates?
Yeah, this is obviously an element that we are also looking at very closely. Unfortunately, the two, you cannot relate them completely together because what goes into asset linked fees is more than ETFs AUM only. You also have mutual fund fees that go into that as well as OTC derivatives. It's not completely linked, and there will be always some discrepancy between one and the other. The main element that has been driving these two growth percentages a little wider than we normally would expect to see is that during the third quarter of 2017, we had some particular catch-up effect with respect to OTC derivative fees, which was not recurring this year.
It was mostly the OTC derivative fee revenue that didn't show the same level of growth and therefore driving the overall asset-based fee growth level at a level of 11% versus the 23% ETF AUM that you're referring to. The main reason is that particular element. If I look underneath the asset linked fees growth, the assets based levels of growth as well as the fees and basis points, I'm very encouraged about those trends, and I think we are there in a good position for the future.
Got it. That makes sense. Thanks. Just quick follow-up. Don't mean to beat on the lower incentive comp question, but just how much of that is lower headcount versus lower incentive comp per head, I guess?
Again, I mentioned that before. If you look at the expense run rates from last year to this year, the reduction about 50/50 for lower incentive accruals versus 50% for all the efficiency programs. The efficiency programs are more than headcount related only. There's also many other elements that go into that. Think about lower real estate costs, lower professional fees, external professional fees that we are driving down, data costs, technology, and all other elements that go into the mix as well. It's more than headcount related only.
Okay. Thank you.
Great. Thank you. Well, let me close the call by thanking all of you for great questions and your engagement, not just on this call, but throughout the quarter. We look forward to speaking with you again at the end of the fourth quarter and providing results. We'll add in some of the elements of questions that you have asked today that we need to follow up on. I'm very pleased with the benefits of our diversified portfolio, the way that we work together, the interconnectedness of that, and the results that we're able to provide you today despite the decline in global bond issuance. You can rest assured that we continue to be committed to driving top-line growth, to finding ways to ensure that we're responsive to our customers' needs, and finding new ways to engage with markets.
We're also committed to ensuring that we can manage the company way that's lean, it's efficient, and that we're providing the best growth for our shareholders. Thank you again for your questions and your comments, we'll see you guys again in a quarter. Thank you very much.
That concludes this morning's call. A PDF version of the presenters' slides is available now for downloading from investor.spglobal.com. A replay of this call, including the Q&A session, will be available in about two hours. The replay will be maintained on S&P Global's website for 12 months from today and by telephone for one month from today. On behalf of S&P Global, we thank you for participating and wish you a good day.