Moody’s Drops After Profit Falls on Bond Issuance Slowdown

Moody’s Corp. (MCO), owner of the world’s second-largest provider of credit ratings, dropped after its fourth-quarter profit fell 30 percent as Europe’s sovereign-debt crisis slowed bond sales around the world.

Moody’s fell 1.7 percent to $38.31 a share, after sliding as much as 11.4 percent. The company’s net income dropped to $96.2 million, or 43 cents a share, from $137.4 million, or 58 cents, a year earlier, New York-based Moody’s said today in a statement. That was less than the average forecast of 49 cents of five analysts in a Bloomberg survey.

Companies from the U.S. to Europe to Asia postponed bond sales in the fourth quarter as Greece and its creditors struggled to reach an agreement to cut the country’s debt, roiling markets. That meant fewer corporations, cities and countries paid Moody’s Investors Service for ratings on new offerings, which accounted for about 39 percent of the firm’s revenue in 2010, according to data compiled by Bloomberg.

“Issuance in the fourth quarter was quite weak,” Douglas Arthur, a New York-based analyst at Evercore Partners Inc., said in a telephone interview before the results were announced.

Moody’s said revenue rose 0.5 percent to $567.1 million for the quarter, from $564.3 million in the corresponding period of 2010. The firm’s analytics unit, which sells software and consulting services, accounted for $200.2 million of that total, up from $181.6 million a year earlier.

Buffett’s Stake

Warren Buffett’s Berkshire Hathaway Inc. is Moody’s biggest shareholder, with a 13 percent stake, worth about $1.1 billion, Bloomberg data show.

Corporate bond issuance worldwide fell 10 percent to $660.5 billion in the last three months of 2011 from $735.5 billion in the same period of 2010, according to data compiled by Bloomberg. Sales picked up to $338.5 billion in January, almost double December’s total.

“What we’re seeing, and this is very recent, is an improvement in market tone,” Ray McDaniel, Moody’s chief executive officer, said today on a conference call with analysts. “The pipelines could be characterized as steady, but probably not more than steady.”

Revenue at Standard & Poor’s, the largest credit-ratings company, fell 8 percent to $434 million in the fourth quarter, the New York-based unit of McGraw-Hill Cos. announced last week.

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.