Good morning, and welcome to S&P Global's third quarter 2026 earnings conference call. I would 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. Mark Grant, Senior Vice President of Investor Relations and Treasurer for S&P Global. Sir, you may begin.
Good morning, and thank you for joining today's S&P Global third quarter 2026 earnings call. Presenting on today's call are Martina Cheung, President and Chief Executive Officer, and Eric Aboaf, Chief Financial Officer. In addition, Cathy Clay, CEO of S&P Dow Jones Indices, will be joining for the Q&A portion of today's call. We issued a press release with our results earlier today. In addition, we have posted a supplemental slide deck with additional information on our results and guidance. If you need a copy of the release and financial schedules or the supplemental deck, they can be downloaded at investor.spglobal.com. The matters discussed in today's conference call 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. Additional information concerning these risks and uncertainties can be found in our Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission. In today's earnings documents and during the conference call, we are providing non-GAAP financial information. This information is provided to enable investors to make meaningful comparisons of the company's operating performance between periods and to view the company's business from the same perspective as management. The earnings release contains financial measures calculated in accordance with GAAP that corresponds to the non-GAAP measures we are providing, and the press release and the supplemental deck contain reconciliations of such GAAP and non-GAAP measures.
The financial metrics we will be discussing today refer to non-GAAP adjusted metrics unless explicitly noted otherwise. All financial information presented in the earnings documents and to be discussed on today's call reflect the company's results on a continuing operations basis, unless otherwise stated, and prior periods have been recast accordingly to conform to this current presentation. At this time, I would like to turn the call over to Martina Cheung. Martina.
Thank you, Mark, and thank you to everyone joining us this morning. I am also very pleased to have Cathy Clay, CEO of S&P Dow Jones Indices, with us for the Q&A portion of the call. I will start with the bigger picture before I get into the quarter. Our strategy rests on three priorities: advancing our market leadership, expanding into high-growth adjacencies, and amplifying our enterprise capabilities and AI. Today, we are taking the next step on that first priority, sharpening our focus on the markets where we lead. S&P Global is the trust anchor in three of the world's most important markets: credit, equities, and commodities. The strategic review we announced this morning is about putting our investment where we are strongest. Now turning to the quarter.
We delivered solid performance in the quarter, driven by strong execution and deep engagement with our customers, and our AI initiatives are starting to show real traction. Revenue growth accelerated in Indices, Energy, and Market Intelligence, and we expanded margins in each of these divisions. Ratings revenue growth decelerated modestly as we expected. But the point I would make is that the durable, profitable growth of our benchmark franchise remains robust. Benchmarks revenue increased 7% and total recurring revenue across the enterprise increased 8%. With acceleration in subscription revenue, strong incremental margins, and continued productivity gains, we delivered 60 basis points of margin expansion in the quarter. On capital return, we have repurchased $4 billion in shares so far this year, and we are on track to complete more than $7 billion in repurchases by year-end.
We are also seeing real improvement in customer traction and in our speed of execution, and that helped drive revenue growth acceleration in both Market Intelligence and Energy. Our benchmarks remain critical components of market infrastructure across credit, equities, and commodities. Supply chain diversification and data centers are topics in nearly every customer conversation we have, and our customers are turning to S&P Global more than ever to make their most important decisions. As you saw in the release this morning, we also announced a strategic review for Capital IQ and associated data businesses, which I will be discussing more in a moment. Turning to the operating environment. This year has brought geopolitical conflict, shifting rates, and swings in commodity markets, but also strong activity across credit and equity markets.
Our clients have remained resilient, and as AI and massive capital investment reshape markets, what we are seeing is that trusted benchmarks and data matter more than ever. In the debt markets, there was strong demand for rated debt in the quarter. The issuance environment was favorable, with the impact of higher Treasury yields offset by continued near-record tight credit spreads. S&P Global remains the rating agency of choice for AI-related and hyperscaler issuance. We continue to see above-average returns in the U.S. equities market, and we made good progress in high-growth adjacencies like DeFi and prediction markets. In Energy, customers are adapting to geopolitical and supply chain volatility. Our global trading services business stabilized in the third quarter, and renewals are returning to the levels we saw prior to the Iran conflict. Demand for our AI products is also very strong.
During the quarter, we combined our MCP tools and adaptive retrieval agents into one holistic AI Data Portal offering. Demand for our mission-critical data is very strong, and we launched Ratings, Energy, and Visible Alpha data in MCP during the quarter. What we hear consistently from customers is that they are choosing S&P Global data because it is highly performant with lower error rates compared to other providers. Our adaptive retrieval agents are also resonating strongly with customers. We signed a large multi-year competitive displacement in the quarter that combined Capital IQ with our AI Data Portal solutions from MI. We also signed a very large deal with a global energy company that combined an upstream win-back with our AI-ready data. Negotiations with customers on AI rights are normalizing, and we are signing deals with robust pricing that protect our IP.
Customers see the value in leveraging our AI-ready data while respecting our intellectual property. Sales cycles stabilized following some temporary noise last quarter, contributing to the acceleration in subscription revenue growth in both Market Intelligence and Energy. The strength of the S&P Global Ratings franchise was clear in the third quarter, with total billed issuance up 8% year-over-year. The first three quarters of this year are the three strongest quarters on record for billed issuance. Hyperscaler issuance remained strong in the quarter, bringing the year-to-date total to approximately $240 billion, and we continue to expect between $250 billion and $300 billion for the full year. We have seen continued strength in investment-grade issuance outside of the hyperscalers. Excluding hyperscaler issuance in the third quarter, investment-grade issuance would have increased around 15%, while total billed issuance would have been up low single digits.
We expect issuance to remain robust in absolute terms, but we are lapping a difficult year-over-year compare in the second half. Our updated guidance assumes high single-digit billed issuance growth for the full year, reflecting our continued expectations for $250 billion- $300 billion in hyperscaler issuance. We now expect 20%-30% growth in M&A issuance this year, given the strength of M&A-related issuance in the third quarter. Moving on to Indices. S&P Dow Jones Indices remains the global leader in indices, both in terms of assets under management and in index-based derivatives. We had more than $600 billion in net inflows into our ETF products, and we ended the quarter with ETF assets under management up 26%. Continued market volatility drove a 15% increase in average daily volumes for our exchange-traded derivatives. The strength of this franchise creates powerful opportunities for partnership and collaboration in new and existing markets.
We announced several agreements in the last few months that demonstrate the importance of partnering with S&P Dow Jones Indices for leading market participants. The extension of our S&P 500 options agreement with Cboe solidifies our partnership through the next 25 years and creates meaningful value for customers and shareholders. We are actively pursuing opportunities to expand the addressable market for our intellectual property in areas like prediction markets. We continue to innovate and explore opportunities and partnerships that take advantage of the rapid innovation in this space, enabling our customers to leverage our products in new ways. We do not expect these announcements to have a meaningful impact on 2026 financial results, but we do expect to benefit in 2027 and beyond. As we expected, Energy revenue growth accelerated in the quarter, though energy and commodities markets remain volatile.
Oil prices remain elevated, and we expect oil to stay around $100 per barrel through the fourth quarter. We saw better traffic through the Strait of Hormuz, with flows reaching almost two-thirds of pre-war levels. That made it easier for customers to transact with confidence and drive subscription growth in the quarter. We are also seeing market participants return to the derivatives products based on our benchmark prices as traders and others adjust to more volatile markets. LNG refined products and chemicals remain more constrained, and our customers are using our data to help identify and plan for alternative sources and partnerships. I would also say our recent acquisition of datacenterHawk could not have been timelier. Combined with 451 Research, S&P Global is now a leading provider of data center data and insights.
Demand for data center build-out is unprecedented, with our teams forecasting significant increases in demand for power, chips, and materials to deliver that infrastructure. In fact, our team forecasts nearly $900 billion of CapEx this year for the six largest hyperscalers, nearly doubling from 2025 levels. The intensity of investment in this area is benefiting every one of our divisions, highlighting the growing convergence between financial markets and commodity markets. Obviously, this year, debt issuance and equity valuations have been driven higher by AI and data center investments. Demand is also increasing for supply chain insights, counterparty credit analytics, power forecasts, and logistics data among financial services and industrial customers who need to understand these dynamics in depth. Demand for our AI products is strong. For several quarters, customers using our AI solutions have increased their spend with us at a much faster rate than average.
In Market Intelligence, ACV growth is now 1.8x the growth rate of non-AI customers. In energy, it remains approximately 3 x. This is a strong signal of the value of our AI solutions to our customers. Over time, we believe growth rates will converge as more of our customers become AI customers. API call volume grew rapidly, up nearly 50% since Q2 and more than 4,000% year-over-year. More customers are expanding in-house solutions and integrations with frontier models powered by our data. Negotiations with customers on AI rights are normalizing, and we are signing deals with robust pricing that protect our IP. As I mentioned earlier, that comes down to the quality of our AI tools and our unique data sets like Visible Alpha. Turning to slide 11.
We announced today that we have initiated a strategic review of alternatives for Capital IQ and associated data businesses within Market Intelligence, including their potential separation. The businesses being considered for separation include the Kensho Data and Platforms businesses within Market Intelligence, specifically Capital IQ and associated data businesses. While the exact perimeter remains under review, we expect to retain RatingsDirect and RatingsXpress, as well as Enterprise Solutions. These businesses operate at scale, with high recurring revenue and a large long-standing base of more than 15,000 clients and more than 355,000 users. Demand for their trusted data continues to grow as customers increasingly seek to integrate it directly into their own systems and tools. We are confident in the ability of these businesses to create incredible value for our customers while rapidly innovating to bring differentiated data and insights to the market in an AI-first way.
And we believe separate ownership would give them the dedicated investment and focus needed to continue the revenue growth acceleration and rapid innovation that we delivered this quarter. Given the commercial and data relationships between S&P Global and the businesses under review, we would seek to keep our interests closely aligned in any transaction. At the same time, a more focused S&P Global would allow us to prioritize investment and reinforce our strengths in the markets where we have the strongest position and are best enabled to create value. S&P Global is deeply embedded in the world's credit equities and commodities markets, providing trusted benchmarks, mission-critical data, and insights that are essential to how those markets operate. Our expected go-forward portfolio benefits from durable secular tailwinds and attractive incremental margins. This allows us to invest while delivering consistent margin expansion over time.
We expect that when and if this process is completed, S&P Global will be a focused and synergistic organization of high-growth businesses positioned for strong growth in organic revenue, profit, and EPS. We believe this portfolio can also generate significant free cash flow, enhancing our capital allocation flexibility, and ultimately, our ability to return capital to shareholders. There is no definitive timetable for completing this strategic review. What I can tell you is that maintaining continuity for our customers and our colleagues throughout this process is of the utmost importance. Existing contracts and service commitments remain in place, and we will ensure that our valued customers continue to receive the innovative products and differentiated data they rely on today. While this process is underway, we will be thoughtful about the impact it could have on our customers, our people, and our shareholders.
We will provide updates at appropriate times, but we are very early in this process, and we expect the earliest meaningful update we would be able to provide will be on our February earnings call. With subscription growth accelerating, margins expanding, and an improving outlook, we are pleased with the excellent results we delivered in the third quarter. We are excited about the opportunities to come for Capital IQ and its related businesses, and we are excited about the prospects for S&P Global. We look forward to finishing the year strong. Now I will hand it over to Eric to take you through the details of the quarter and the guidance.
Thank you, Martina, and good morning, everyone. Starting with slide 14, we delivered a strong third quarter financial result with 7% revenue growth, both on an organic constant currency and all-in basis, as M&A and FX had only modest net impacts. We saw revenue acceleration in three of our four divisions, which I will come back to shortly. Adjusted expenses grew 5% as we invested in key growth areas funded with productivity initiatives and held total headcount flat year-over-year. We thus delivered 60 basis points of year-on-year margin expansion to 53.5%. Excluding OSTTRA from the prior year period, our third quarter 2026 margin expansion would have been up 120 basis points. We delivered 8% growth in adjusted operating profit and 9% growth in EPS, driven by more than $6 billion in share repurchases over the last 12 months, including another $2.6 billion in share buybacks launched in the third quarter.
EPS growth was partly tempered by the timing of tax expenses in the quarter. I will now turn to our divisions, starting with Ratings on Slide 15. Ratings revenue grew 2% in the quarter. As expected, growth moderated from the first half of the year against tougher comparisons. Issuance was up 8% and transaction revenue increased 1%. Both were led by considerable strength in investment grade, up 28%, which benefited from several large M&A and hyperscaler deals, partly offset by high yield, bank loans, and structured finance, all of which had difficult prior year comparisons. This quarter, the mix shift out of high yield and bank loans into investment grade led to a wider-than-usual variance between billed issuance growth and transaction revenue growth. However, year to date, that variance shrinks to less than 2 percentage points, with issuance and revenue growth up 15% and 13%, respectively.
We expect billed issuance growth to generally mirror transaction revenue growth over time. Non-transaction revenue grew 4%, primarily driven by higher annual fee revenue as well as Crisil. Growth in non-transaction decelerated modestly given the much tougher comparison, which will continue into the fourth quarter as well. When looking at combined transaction and non-transaction revenue, as you can see on the slide, the 10% growth in financials and 8% growth in Crisil and other revenue was tempered somewhat by the slower growth in governments and corporates, as well as a modest decline in structured finance. All that said, we are also very pleased to have closed the OpenZeppelin acquisition yesterday, which gives us a leading position in the smart contract space and reinforces our progress in DeFi. Adjusted expenses increased by 7%, driven by higher compensation costs and continued investments in strategic initiatives, partially offset by our productivity efforts.
While margins contracted approximately 130 basis points in the quarter, this can be impacted by the timing of expenses. Year-to-date, Ratings margins have expanded just over 100 basis points. Now, turning to S&P Dow Jones Indices on slide 16. Indices maintained its strong momentum, reporting the 14th consecutive quarter of record revenue. Revenue in the quarter grew 20% with strength in both asset-linked fees and exchange-traded derivatives. Revenues associated with asset-linked fees grew 24% year-over-year, with growth driven by a balanced mix of market appreciation and net inflows into products based on S&P Dow Jones Indices. As the world's largest index business by AUM, we achieved a new record quarter for ETF AUM of $6.5 trillion in the quarter, and our strategic initiatives are contributing to another number one ranking in total ETF market flow capture among index providers.
Exchange-traded derivatives revenue increased 19%, its fourth consecutive quarter of double-digit growth, led by strength in SPX ETD volumes. Last month, as Martina mentioned, together with Cboe Global Markets, we announced the extension of our exclusive licensing agreement through 2051. The new agreement builds on more than 40 years of collaboration and positions us well to drive further innovation and growth. The contract extension will not impact 2026 financial results, but we do expect a couple percentage points of incremental total index revenue growth in 2027. We will provide more detail when we give 2027 guidance in February. Data and custom subscriptions revenue grew 7%, or 5% organically, supported by continued new business growth in NFA contracts. Adjusted expenses were up 14% year-over-year, driven by investments in growth initiatives and higher compensation costs. Indices operating profit grew 22%, and operating margin expanded 150 basis points to 71.9%.
Now turning to S&P Global Energy on slide 17. Energy revenue rebounded to 6% on both a reported and organic constant currency basis, benefiting from continued strong demand for Platts benchmarks, as well as our differentiated data research and thought leadership. We delivered this healthy growth despite ongoing geopolitical uncertainty and the negative impact of sanctions worth about half a point. In the third quarter, we saw improvements in the operating environment. Impacted customers in the Middle East have begun to stabilize and adapt to the current landscape. This was reflected in our accelerating organic growth, rising sales, and solid GTS volumes. The near-term environment remains uncertain, but we continue to believe these headwinds are transitory, and we continue to expect organic constant currency growth to normalize in 2027 to within the 6%-8% average range we outlined at our 2025 Investor Day.
CERA grew 5%, or 6% organically, when accounting for the divestiture of Upstream Software. Organic growth benefited from the broad-based increases across our offerings, particularly insights and analytics and consulting. We remain pleased to see ongoing traction in our upstream data transformation, with a return to positive revenue growth and encouraging feedback from our early customers of CERA Titan. Platts revenue increased 7% in the quarter, driven by strong growth in price assessments. Growth in GTS revenue stabilized from last quarter as well, despite a challenging compare from last year. The third quarter of 2025 and the third quarter of 2026 are tied for the second highest quarterly revenue on record. As Martina mentioned, demand for our AI products has been very strong, and our discrete AI products in Energy contributed around 50 basis points to our revenue growth this quarter.
Adjusted expenses grew by just 2%, driving margin expansion of 190 basis points to 48.1%. Energy's modest expense growth in the quarter was driven by higher technology and compensation costs, almost fully offset by productivity programs and expense discipline. Turning to Market Intelligence on slide 18. Revenue growth accelerated to 7% on both a reported and organic constant currency basis in the third quarter. We saw particular strength in Kensho Data and Platforms, and Kensho Data itself was Market Intelligence's fastest-growing business. We remain encouraged by the strong customer adoption and demand for our AI-ready data. Similar to our Energy division, our discrete AI products contributed approximately half a point of growth to Kensho Data and Platforms this quarter. Sales cycles have normalized following a slight elongation last quarter, and we are no longer seeing a negative impact to revenue growth.
In fact, we saw a small benefit in the quarter from some true-ups on contracts that renewed after the second quarter ended. We saw improved sales and renewal rates in 3Q as we closed on several of the large deals that had extended from second quarter, while also ensuring that our intellectual property was protected for the long term. In the third quarter, subscription revenue grew 6% and 7% on an organic basis, benefiting from broad-based growth across our subscription franchises. Kensho Data and Platforms revenue growth accelerated to 10% or 6% organically. We saw acceleration in Kensho Data driven by strong adoption of our AI-ready data feeds with growth comfortably in the double digits. Enterprise Solutions reported revenue grew 2%, reflecting the divesture of EDM and thinkFolio, while organic revenue was up a strong 8%. This was driven by broad-based growth across products, particularly in Lending Solutions like WSO.
Enterprise Solutions organic subscription revenue grew 7%, also driven by strength across products. This performance really demonstrated the critical nature of these products in our customers' workflows and also in the markets themselves. Market Intelligence's adjusted expenses increased 5% year-over-year, driven by inorganic expenses from the With Intelligence acquisition, as well as higher technology costs, partially offset by the impact of recent divestitures and productivity programs. Market Intelligence delivered 110 basis points of operating margin expansion to 36.2% in the quarter. Now shifting to our outlook, starting with slide 19. As a reminder, with our spin of Mobility Global completed on July 1st, historical mobility results were moved to discontinued operations. Consistent with the guidance we provided in the second quarter, our full year guide on both a GAAP and adjusted basis excludes the contributions from Mobility for the whole year. Slide 19 outlines our GAAP guidance.
Slide 20 shows our adjusted guidance. Given the outperformance in both Ratings and Indices year to date, we're raising our full year guidance for organic constant currency growth to a range of 7.5%-8.5%. We're also increasing our guidance for adjusted operating margin expansion. We now expect total operating margin expansion into the range of 75-100 basis points. Excluding the impact of OSTTRA, which was divested late last year, we would expect margin expansion of 125-150 basis points. While we expect slightly higher interest expense as a result of the expected bond offering later this quarter, we expect the EPS impact to be more than offset by lower corporate unallocated expense and a lower share count. So we're raising our guidance for adjusted EPS as well to a range of $17.70-$17.95. Now turning to our division guidance on slide 21.
As I mentioned, we are raising our outlook for Ratings given our expectation for high single-digit billed issuance for the year. We now expect organic constant currency revenue growth of 6.5%-8%. In the fourth quarter, this implies a slight decline year-over-year in transaction revenue, as we have been signaling all year, and a modest growth in non-transaction revenue as we lap a difficult comparison from the fourth quarter of last year. For the full year, we expect Ratings margin expansion to be towards the lower end of the 75-100 basis point range we just discussed for the company as a whole. For Indices, we now expect organic constant currency growth in the range of 17%-18.5% as we continue to benefit from strong equity valuations and strong net flows.
For the full year, we expect Indices margins to be towards the higher end of the 75-100 basis point company range. For Energy, there is some nuance to the Upstream Software divestiture that impacts reported revenue growth in both the third quarter and the fourth quarter, just due to timing. We continue to expect organic constant currency growth of 4.5%-6% for the full year. However, the Upstream Software divestiture was completed on September 1st, so only one month of that impact was seen in the reported results in 3Q. We will see a full quarter's impact in the fourth quarter, so the delta between organic and reported revenue growth will be wider in Q4. We also saw a benefit from very strong one-time sales in the third quarter that are harder to predict and may not reoccur in the fourth quarter.
Importantly, on an organic constant currency basis, we expect subscription growth to continue to improve in the fourth quarter. For the full year, we expect margin expansion in Energy to be strong, but modestly below the range we are guiding to for the full company. Margins in the fourth quarter will be negatively impacted by inorganic activity, including the absence of Upstream Software and the addition of datacenterHawk. For Market Intelligence for the full year, we continue to expect organic constant currency growth of 5.5%-7%. Though with only two months left in the year, we are reasonably comfortable that we will be slightly above the midpoint of that range. For the full year, we expect margin expansion near the high end of the range we discussed for the whole company. Lastly, for the fourth quarter, we expect adjusted free cash flow of approximately $1.6 billion.
With that, let me turn the call back over to Mark for your questions.
Thank you, Eric. For those on the line, if you would like to ask a question, please press star one and record your name. To cancel or withdraw your question, simply press star two. For those joining via telephone, please turn off speaker phone in order to optimize sound quality. Participants will be limited to one question in order to allow time for others during today's Q&A session. Operator, we will now take the first question.
Thank you. Our first question comes from Ashish Sabadra with RBC Capital Markets. Your line is open.
Thanks for taking my question. Congrats on the solid quarter and announcing the strategic review. My question was just around the timing. Why did you decide to launch the strategic review now? Also, as you think about the RemainCo , how does the strategic review enhance both the financial profile as well as the quality of the RemainCo ? Thanks.
Hi, Ashish. It's Martina. Thanks so much for the question. Maybe just to comment on the timing and why now. This is really a question of long-term positioning for both S&P Global as well as Cap IQ and the associated businesses. I think it's important to recognize that as we enter into this review, we're coming at it from a position of strength, really, with Cap IQ and the associated data businesses. You saw that acceleration in the third quarter, particularly on Kensho Data, where the commercial execution and just the growing demand for our super high-quality and performant data is really taking hold. We're excited about that. You also have seen that we are the trust anchor for three of the world's most important markets, the credit markets, the equity markets, and the commodities markets.
While we have the potential to see if, under a new owner, the KDP portions of the business that are in the perimeter could grow faster, could innovate faster, we also have an opportunity to look at a more focused portfolio within S&P Global and then make sure that we are actually focusing our investments in the markets where we are leading and where we are the strongest. Also, that would result in, I think, a very favorable financial profile. Eric, do you want to comment on that?
Yeah, Ashish, I'd just say, it's premature at this point. We're working through the perimeter of potential review and potential separation. As we learn more, we'll certainly come back to you, and certainly by the February earnings call, we'll look forward to giving you more of an update.
Thanks, Ashish.
Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.
Thanks so much. I also wanted to ask a little bit about the review. You've said in the past that Cap IQ is approximately 6% of revenue. Sounds like maybe there are some additional pieces of Kensho Data & Platforms that are being considered here. I was wondering if there was any way to give either a range or an approximate size inclusive of this additional data. I know there was a Bloomberg article about this early last month, so just wondering if you've had any inbounds in the meantime. Thank you.
Hi, Toni. Thanks for the question. I would say that the businesses under review here are the Cap IQ business and the associated data businesses. Those data businesses would include financials, SNL, Visible Alpha. What we said is what is not in the perimeter is Enterprise Solutions, RatingsDirect, and RatingsXpress. It's a review, so the overall fine-tuning, if you like, of the perimeter obviously is going to occur as we continue through this evaluation and the process. It's something we can come back on. We certainly expect to come back with more clarity potentially on that in February when we do our next earnings call. Maybe on the process itself and if we've had inbounds, Eric, do you want to comment on that?
Sure. Toni, we've had a good amount of work that we've been doing over the last month, in particular, in terms of the perimeter, as Martina described. We've also been front-footed in terms of going out and exploring interest. We've gotten quite a bit of interest from a number of different potential firms on the other side. We've gone ahead and signed NDAs with a number of them. We've engaged with advisors. We're tackling this expeditiously. Obviously, there's no certainty of an outcome one way or the other, but we're tackling this expeditiously and certainly update you as we have more to share.
Thanks, Toni.
Thank you. Our next question comes from Faiza Alwy with Deutsche Bank. Your line is open.
Yes. Hi. Thank you. Good morning. I wanted to ask about the Ratings business. Martina, I believe your Ratings research team just put out something in the last day or so forecasting slower market issuance in 2027, which I know is different from those issuance, and I know it's early, but it would be great to hear your take on if the strong issuance growth this year indicates perhaps slower growth next year and how we should think about the puts and takes under various macro and credit scenarios.
Hi, Faiza. Thanks so much for the question. Yes, it is a little bit too early for 2027 commentary. We look forward to providing more specifics on that in February. That said, I would say we look at this market overall over the medium term as being high growth with very strong secular tailwinds. This is an area where we have extremely strong refinancing walls, around $11 trillion over the next four years. We also see continued demand in areas like private credit, huge demand in project finance. We also see incredible appetite, I think, for structured finance, as well as investment grade.
In fact, we pay, as you know, a lot of attention to fund flows. We have seen quite a good deal of inflows into investment grade funds this year, which we have seen has been a very solid appetite for some of the larger deals that have been done by the hyperscalers. I think maybe just one comment on the hyperscaler growth, because that was such a factor this year. Certainly it was faster than we thought it was going to be. So you saw us raise our estimate for the full year for hyperscaler growth. That is an area where we will look at the announced CapEx from the hyperscalers into 2027. Similar to what we did this year, we will make an assessment of how much of that we think will be funded by the debt markets versus the equity markets.
We will also make an assessment on how much we think will be actually done in year. Some of the leading indicators we are paying attention to there will include the remaining performance obligations of the hyperscalers, which is a good indication of go-forward growth and demand. Those RPOs or remaining performance obligations remain quite high. The latest Visible Alpha sell side estimates there for four of those hyperscalers is just under $3 trillion for 2027. It is not a forecast of CapEx. It is a good leading indicator and reference point, though, for how we think this is going to play out. Thanks for the question.
Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.
Thank you so much. Eric, you mentioned the expected bond offering impacting interest expense. Can we get a little bit more color in terms of size, etc ?
Jeff, I think as we've described before, as we've expanded our planned buyback for the year, which is expected now to be $7 billion, twice the original $3.5 billion that we announced back in February, we'll be issuing a little more debt. The expectation right now is about $2 billion of debt at prevailing market rates, and that obviously factors into interest expense that we'll actually cover. Thanks.
Thanks, Jeff.
Thank you. Our next question comes from Surinder Thind with Jefferies. Your line is open.
Hi. Could you maybe talk about the adjustment in the CapEx spend, and if it's just a timing issue or there's other considerations that we should be thinking about?
Surinder, it's just the usual timing quarter by quarter and within and outside the year, and then just the effect of some of our ongoing spend in technology to support the franchise and the growth that we're seeing.
Thanks, Surinder.
Thank you. Our next question comes from Curt Nagle with Bank of America. Your line is open.
Great. Thanks so much. I think you commented that AI revenues drove 50 basis points of growth in energy. What was that in 2Q? Would you be able to give a comparable metric for MI, i.e., how much AI revenues contributed to growth in that segment?
Curt, it's Eric. The way to think about this is that AI functionality features have been a big part of our conversation with clients across the wide range of products and services that we offer. In addition, there are some discrete areas where we actually charge for either AI data, AI-ready Data Portal access, or even more sophisticated search functionality around textual large information sets. That's what I was mentioning here in the prepared remarks. It was about 50 basis points in the energy business. It was about 50 basis points of a tailwind in the Market Intelligence business, and something that we see as a nice tailwind. We didn't describe it in first quarter and second quarter because it's been building over time, and we're quite pleased with what we've seen. Anyway, it's a nice tailwind, one that we expect to continue.
Like I said, 50 basis points in the energy business and a 50-basis point tailwind in Kensho Data and Platforms. Thanks very much.
Thanks, Curt.
Thank you. Our next question comes from Scott Wurtzel with Wolfe Research. Your line is open.
Hi, good morning, guys. Thanks for taking my question. Just wanted to ask on the sales cycles trends that you're seeing and that sort of maybe positive inflection that occurred during the quarter. Just wondering, is this sort of now standardized across all of your AI product sales such that we may not be seeing this incremental lengthening going forward? Thanks.
Hey, Scott, it's Martina. I would say that we saw some very good execution in both Market Intelligence and in Energy around the sales cycles. In the Energy division, the renewals are really back to what we would have seen pre-war levels, and that is with an incredible focus on getting through those conversations around AI rights. We saw the same thing in Market Intelligence, a very deep focus on making sure that we assert our rights while protecting the economic upside. The good news is that our clients across both have recognized that and are accepting what we have now done, which is essentially standard T&Cs across all of the areas of the business.
This is something that was really more of an impact prior, and so we would see that as something that we'd solve for going forward. I think kudos to the commercial teams in both divisions who did a great job with that. Thanks for the question.
Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.
Yes. Hey, good morning, everyone. I hear Cathy's on the call, so I guess I have to ask an index question. First off, good to get the Cboe out of the way, but you also, I think, made some prepared remarks about just the opportunity sets on the derivative side in general. So maybe Cathy can double-click on what she expects to see there over the next couple of years. In particular, I saw the Kalshi announcement yesterday. Sounds like you're looking to explore some opportunities with them. So there weren't any product announcements, so just wondering what could be on the horizon there. Sorry, to be specific here, I think you have an existing relationship with Hyperliquid, so maybe you have to wait for that to do something with Kalshi. Maybe talk about that.
Just lastly, how do you think about growth in that area and how to not cannibalize existing relationships with Cboe and CME? Sorry, that was a lot, but I know Cathy's on the call.
Hi, Alex. It is Cathy. Thanks so much. Appreciate the question. So I'll start with Cboe. Of course, we're so excited to be able to bring that deal across the line. This extension does a couple of things. As Martina and Eric talked about, this really accelerates the economics into S&P DJI by six years, and it also gives us a nice incremental tailwind of growth in the years following 2027. I would say, Alex, the equally important outcome, though, of this extension is that it really provides clarity and certainty for all market participants that are key to this really valued ecosystem. That certainty is really what keeps those market participants investing with confidence in SPX index. So we're really pleased to extend this partnership with the partner over 40 years that has built this incredible ecosystem. We think there's more innovation to do with Cboe.
Obviously, in the press release on the announcement, we talked about tokenized index options whenever that comes. We have a great record of innovating with Cboe over the years, and we continue to think about opportunities to do that. When we look over into, let's say, prediction markets, this is really nascent, obviously, and very early days, but we see an incredible opportunity and a lot of white space to participate both as an index provider in these markets, so providing our indices into these prediction markets for the decision resolution mechanisms that are key for the marketplace, but also, as we announced in the Kalshi announcement, using that data to create new innovative indices off of prediction markets data. So again, very early days, but we're really excited to participate in these new markets in a meaningful way.
We're also going to be innovating in these markets with Cboe and CME, our longstanding partners. We just think there's so much opportunity, both from index and data in these new markets. Thanks, Alex.
Thanks, Alex.
Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.
Thank you. Good morning. Just on the portfolio that you're considering for the review, I guess you've given us some of the growth profile of that business. I was just curious if you could help us with the margin profile, especially once you remove the high-margin Ratings businesses. I also just wanted to understand why Enterprise Solutions is being retained and perhaps the margin profile there as well.
Hi, Manav. Thanks for the question. I think, as we mentioned earlier, it is a little bit too early. It is a bit premature, really, to comment on the growth and margin profile of the in-scope products and services for the strategic review. We are going to have to just nail down the perimeter before we can do that. Of course, we are working quickly on that, and we will come back as soon as we can. The other point that I would make is we are not including RatingsDirect and RatingsXpress. I do not know if that was part of your question, if that was in scope or not, but I heard you mention it, so I just wanted to make sure that was clear. With respect to Enterprise Solutions, look, I go back to the points that I was making earlier.
We are leaders in the credit markets, the equity markets, and the energy markets. Market participants make decisions sometimes underpinning trillions of dollars every single day off the back of the information that we provide, as well as the mission-critical workflows that serve those markets. We have the credits and loan anchor in the markets is really our Enterprise Solutions, Lending Solutions suite, WSO, ClearPar, and the other products that comprise the Lending Solutions suite, and those are areas where we actually reinforce the ways in which we cover and inform the markets, and also how we generate additional high-quality and proprietary content that is unique to S&P Global. Think about it from that perspective, that we are looking at this from the perspective of the credit markets, the equity markets, and the commodity markets.
I would also say that to the point that I made earlier around can this unlock value both for Cap IQ Pro and those businesses, the data businesses, but also for S&P Global, I do see this as a potential opportunity to do both. The go-forward S&P Global business would have a very strong financial profile and potentially greater flexibility from a capital allocation perspective, including returning more capital to shareholders.
Thanks for the question.
Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.
Hi. Thanks. Good morning. Cap IQ and Kensho have been central to your AI strategy and recent customer wins. If those businesses are separated, how would that affect your broader AI strategy, and which AI capabilities would remain with S&P?
Hi, George. Thanks for the question. You are absolutely right. Kensho has been a phenomenal asset that has contributed massively to Cap IQ, to Market Intelligence over the years since we acquired it in 2018. Over the years, they've actually contributed the linking technology, they've contributed transcripts technology, search models, and then of course, most recently, the build-out of our APIs, our MCPs, and our Adaptive Retrieval agents. They've really been very focused on helping to drive the growth, particularly within Cap IQ and the associated data businesses. I think here we would look at the Kensho team as being very important to the perimeter.
We don't know exactly how that's going to shape up, but what I will absolutely say is that we would make sure that all of the momentum that Sally is building up in KDP with the Kensho Labs team and the other Kensho engineers, that that is absolutely continuing at pace. Honestly, we have faster innovation now than we've ever had. On the other side, we'll make sure that S&P Global retains the capabilities that we need to continue to integrate AI into our products, whether it is in, you saw us announce something recently in iLEVEL. You see great momentum within Energy for our AI products there, and the integration of AI into our core processes and workflows, including for our analysts, our researchers, and others.
We are going to make sure that we are kept whole here, George, and scale the capabilities in the best way that we can as we go forward. Thanks for the question.
Thank you. Our next question comes from Craig Huber with Huber Research Partners. Your line is open.
Yes. Hi. Thank you. I wanted to ask you about AI cost savings. I have been pretty impressed this year, your margin progression in some of your segments here. Can you annualize for us, tell us the annualized AI cost savings, either for the whole company and/or by segment? You were good enough and I think smart enough to tell us the AI contribution to your segments for the revenue side, but can you do it on the cost side of things? Thank you.
Craig, it is Eric. You are right. We are expanding our use of AI across just about every workflow and process that we have here. The emphasis has been on data operations, on researchers, on the software development and product development life cycle, which is a big part of our work, and our analysts. It has really been a success. AI, though functionality, is part and parcel of workflow redesign, simplification, and change. It has to do with the teams and how we are structured, the layers and so forth. There is a big component of AI in our productivity efforts, but they are intermingled and deeply intertwined, as you would expect. What we are focused on, as you can see from the margin expansion we have delivered, that each year we plan and budget for a couple percentage points of productivity gains across the board.
Some of that is directly AI, some of that is non-AI. Most of it is actually mixed and integrated, because that is how we transform the company. What we are doing with that is some of that productivity literally gets reinvested in our growth, feature functionality, and product launches because that is how we want to direct it, and then some we deliver to the bottom line.
Thanks, Craig. Thank you. Our next question comes from Andrew Steinerman with JP Morgan. Your line is open.
Hi. Could you just review some of the puts and takes S&P assumed as fourth quarter credit issuance, specifically talking about AI associated, and when I say AI associated, I do not just mean hyperscaler, financing for the fourth quarter. I know fourth quarter could be a brief quarter for issuance seasonally. I also have a very small, brief housekeeping question. Could you provide us the organic constant currency ACV growth for MI, the ACV growth for MI on an OCC basis?
Andrew, it is Eric. There are a number of the puts and takes for fourth quarter issuances. We certainly expect investment grade to continue to be a good tailwind. We talked about the double-digit growth there, and that will continue. There will probably be some continued offset with rising rates around high yield and leverage loans and so forth, and then governments we will kind of see as they play out. So, those kinds of puts and takes. I think hyperscaler issuance, we described how we have had quite a bit of issuances so far through the third quarter, but we expect several more in the fourth quarter, and that will be a nice tailwind. So, a number of different moving parts.
Back on MI specifically, we saw real nice growth there, 7% organic constant currency. ACV came in nicely around 6.5%, ticked up a bit from the 6% range. It is something we are pleased to, and demonstrates the momentum we are seeing in the business, and the underlying traction that we are seeing with our clients.
Thanks, Andrew.
Thank you. Our next question comes from Owen Lau with Clear Street. Your line is open.
Hi. Good morning. Thank you for taking my question. I have a broader picture question. Given the spin-off of Mobility and now the strategic review for Cap IQ and Martina, could you please talk about what S&P Global will look like in three years, and which area do you think S&P can drive faster revenue growth after all these restructuring? I have a quick one for Cathy. Good to hear from you, by the way. It looks like Kalshi is a preferred relationship, but not exclusive. Could you please comment on what that means and why not making these exclusive, just like your relationship with Cboe? Thank you.
Hi, Owen. It's Cathy. Thanks for the question. I'm going to start with you. In the prediction markets, as I mentioned, this is very new terrain. We are wanting to partner with those that have the most opportunity in the space. Kalshi, of course, is the largest prediction market as of today. Also, Owen, as I mentioned, we are excited to continue to innovate with our other partners like Cboe and CME, in this space. That's an appropriate strategy when there's a lot of unknowns in a new market. We're just looking forward to working with these different partners and really finding the opportunity set. That's exactly what we're doing, Owen, and I'll pass it to Martina.
Thanks, Cathy. Owen, I think for S&P Global, the way for all of us and for our shareholders to think about this particular review that we've announced is that we did not announce a change in the strategy for S&P Global. Our priorities are consistent with what we set out at Investor Day last year, which is around advancing our market leadership, expanding into high-growth adjacencies and expanding our enterprise capabilities and AI. Really, the Cap IQ and associated data business review that we announced is getting at advancing our market leadership. It's that first priority.
What that allows us to do, if we do actually execute a transaction here, is to have an S&P Global that is focused in the areas where we are clear leaders in the debt markets, the equity markets, and the commodity markets with unique benchmarks, differentiated IP coming from those benchmarks and critical tools, mission-critical workflows and models that inform trillions of dollars of decision-making every year. That's really how I would encourage you to think about it over the next several years. This doesn't necessarily change anything that we would have to do with. In fact, it doesn't change anything within indices, within Ratings or within Energy. This is really about the Market Intelligence businesses and specifically Cap IQ and the associated businesses.
I would look at the go-forward S&P Global portfolio as a very strong portfolio with very unique assets and more flexibility around capital allocation, including returning capital to shareholders. Thanks, Owen.
Thank you. Our next question comes from Jason Haas with Wells Fargo. Your line is open.
Hey, good morning, and thanks for taking my question. Can you talk about how integrated Cap IQ and the other businesses under review are with the rest of S&P? Maybe you could compare to how integrated they are versus what we saw with Mobility.
Hi, Jason. I would say that there are cross-division commercial agreements. For example, the Ratings analysts actually use Cap IQ. Then obviously we've got a little bit of a data foundation under Cap IQ that helps with some other parts of the business as well. I would not say that this is deeply complicated, in the sense that, for example, Enterprise Solutions has completely different technology underpinning their platforms and everything else outside of KDP is separate. Ratings is on their own stack, Index is on their own stack, and Energy is on their own stack. We've actually been paying very close attention to how integrated this is, and I think we've proven frankly that we can do large, complicated transactions.
We have a team that has solid playbook on large M&A, and this is one where we've got working, and we're pretty happy that we've got the capabilities in-hand to do this without disruption to our customers and our shareholders. Thanks for the question.
Thank you. We will now take our final question from Jeff Meuler with Baird. Your line is open.
Yeah. Thank you. Can you just talk more on how you are structuring the AI-ready data distribution deals in terms of contract duration and revenue terms to continue to grow alongside your clients as they ramp usage, in addition to continuing to grow as you make more data sets available on Data Portal? Thanks.
Hi, Jeff. Thanks for the question. I would say that the deals themselves, we have seen really nice price increases on broader renewals. That has helped to drive subscription growth. We would expect to continue to see that as well. Now, what I would say is, as our clients are looking at the Adaptive Retrieval product in particular, and this is the agents where you can essentially do more nuanced queries across multiple data sets from S&P Global, that is where we are seeing a potential for consumption-based pricing models. It also complements just the increased interest in new data sets that we are seeing with our clients. I would go back to the first client that we announced last quarter as a good example for the Adaptive Retrieval.
That client was taking Adaptive Retrieval for the existing data sets for which they were licensed, but also with a view to licensing new data sets also because they knew they could get some very good performance from the agent across more data sets. That is how we are working. Sally and the team, in particular in the Kensho Data & Platforms business, are partnering very closely. There is just huge client engagement around this, and I think that we will, over time, see growth rates converge here, between the AI growth rates and normal growth rates as more and more of our clients actually adopt and move to AI-type products. Thanks for the question, Jeff. All right, well, before we close, let me say huge thank you to all of our people at S&P Global for driving the great results we delivered this quarter.
I also wanted to give a special thank you to Steve Kemps, who is retiring as our Chief Legal Officer. For more than a decade, Steve has been a trusted colleague and an excellent source of wisdom and insight for me, our leadership team, and our Board of Directors. I am excited for our new Chief Legal Officer, Thomas Kim, who has already hit the ground running. We want to extend a warm welcome to Thomas and wish Steve all the best in his well-earned retirement. Thank you all again for joining the call this morning.
That concludes this morning's call. A PDF version of the presenter's slides is available for downloading from investor.spglobal.com. The replays of the entire call will be available in about two hours. The webcast with audio and slides will be maintained on S&P Global's website for one year. The audio-only telephone replay will be maintained for one month. On behalf of S&P Global, we thank you for participating and wish you a good day.