Moody’s Corp., the bond-rating firm, said third-quarter earnings rose 35 percent as U.S. corporate debt sales jumped during that period. The company boosted its 2010 profit forecast.
Net income increased to $136 million, or 58 cents a share, from $100.6 million, or 42 cents, a year earlier, New York-based Moody’s said today in a statement distributed by Business Wire. Excluding some items, the company earned 51 cents a share, which compares with 45 cents, the average forecast of six analysts surveyed by Bloomberg.
Sales of corporate debt in the U.S. rose 33 percent to $355.1 billion in the third quarter from the similar period a year earlier, according to data compiled by Bloomberg. Moody’s said today it expects to earn $1.90 to $1.96 a share this year, compared with its previous forecast of $1.75 to $1.85.
“Low interest rates and healthy investor appetite for debt securities are driving the impressive near-term activity in the debt issuance market,” analysts led by Peter Appert of Piper Jaffray & Co., said in an Oct. 11 note to clients. “Strength in both the investment grade and high yield markets drove this performance.”
The company’s shares rose $1.12, or 4.1 percent, to $28.25 as of 9:49 a.m. in New York Stock Exchange composite trading. The shares are up 5.3 percent this year.
Moody’s, whose founder John Moody created credit ratings in 1909, said revenue increased 14 percent to $513.3 million from $451.8 million a year earlier.
The firm faces higher regulatory and compliance costs that it plans to offset by charging about 5 percent more to rate debt, Appert said in a September report after meeting with Chief Executive Officer Raymond McDaniel and Chief Financial Officer Linda Huber. Ratings companies are reacting to new legislation passed after they assigned top marks to U.S. subprime-mortgage bonds just before that market collapsed in 2007.
The U.S. financial-regulation overhaul, signed into law by President Barack Obama July 21, mandates that U.S. agencies remove references to credit ratings in their rules and replace them with standards developed by the Securities and Exchange Commission or the Commodity Futures Trading Commission, for example.
The new regulations also eliminate credit-rating companies’ shield from lawsuits when underwriters include their assessments in documents used to sell debt.
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