Moody's Corp. (MCO) reported a better-than-expected 11% decline
in third-quarter profit on a surprise climb in revenue.
The credit-ratings and research agency raised its full-year
earnings guidance again, this time to $1.60 to $1.68 a share from
$1.55.
A steady stream of new debt issuance has reinvigorated the bond
market--and the market to rate debt. Monday, McGraw-Hill Cos.
(MHP), owner of rival agency S&P, saw that unit improve as
corporate debt issuance offset declines in the structured-finance
market.
Still, a shadow remains over Moody's and other ratings firms, as
lawmakers in the U.S. and elsewhere examine stricter regulation
because of criticism that the agencies' shoddy ratings contributed
to the financial crisis. Wednesday, a key U.S. House panel approved
a bill that would impose more regulations and make it easier for
investors to win lawsuits.
Chairman and Chief Executive Raymond McDaniel on Thursday
credited the strong results to continuing strength in corporate
debt issuance as well as growth from Moody's Analytics.
Moody's posted a profit of $100.6 million, or 42 cents a share,
from $113 million, or 46 cents a share, a year earlier. Both latest
and the prior-year results included restructuring charges, while
previous year also included a tax benefit. Excluding those items,
earnings fell to 43 cents from 45 cents.
Revenue increased 4.2% to $451.8 million.
Analysts polled by Thomson Reuters predicted earnings of 38
cents on $417 million in revenue.
U.S. revenue rose 5.2%. International revenue was up 3.3% and
accounted for 49.2% of Moody's total revenue, slipping slightly
from 49.6% a year earlier.
Ratings revenue climbed 3%, or 5% excluding foreign-exchange
impacts, as corporate-finance revenue rose 32%, driven by better
activity in the high-yield market in the U.S. and issuance of
investment-grade securities in Europe. Structured-finance revenue
slid 17%.
Shares in Moody's closed Wednesday at $24.62 and weren't active
premarket. The stock, which hit an 7-year low in November, has
risen 23% in 2009.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com