Moody’s profit rises as companies issue more debt

NEW YORK: Credit rating agency Moody’s Corp. reported a first-quarter adjusted profit that beat analysts’ estimates, helped by a wave of corporate debt issues.
Net income rose to $ 188.4 million, or 83 cents per share, from $ 173.5 million, or 76 cents per share, a year earlier.
Excluding the impact of a litigation charge of 14 cents per share, the company earned 97 cents per share, according to Thomson Reuters I/B/E/S.
That beat the average analyst estimate of 87 cents per share.
Moody’s settled two long-running lawsuits last week, that sought to hold it responsible for misleading investors, including Abu Dhabi Commercial Bank and King County in Washington state, about the safety of risky debt vehicles on which it had assigned high ratings.
The lawsuits had accused Moody’s Investor Services and S&P, a unit of McGraw-Hill Cos MHP.N, of negligent misrepresentation over their activities regarding the Cheyne and Rhinebridge structured investment vehicles. S&P also settled.
Total revenue increased 13 percent to $ 731.8 million, while total expenses rose about 20 percent to $ 451.4 million. Analysts had expected revenue of $ 729.1 million.
Revenue at Moody’s analytics division, which sells financial research, data and software for assessing risk, increased 9 percent to $ 210.6 million, while revenue at its corporate finance division rose 29 percent to $ 258.3 million.
Companies that issue bonds pay Moody’s to rate their debt, to help investors determine the likelihood of the bond defaulting.
The company raised its full-year adjusted earnings forecast, which excludes the impact of the litigation charge, to $ 3.49 to $ 3.59 per share.
Analysts were expecting $3.51 per share.
It had earlier forecast earnings of $ 3.45 to $ 3.55 per share.
Moody’s shares, which have risen about 18 percent since the beginning of the year, closed at $ 60.55 on Thursday on the New York Stock Exchange.