Moody’s Profit Beats Estimates as Global Bond Sales Climb

Moody’s Corp. (MCO), the world’s second- largest provider of credit ratings, said first-quarter profit rose 12 percent as global bond sales accelerated.

Net income increased to $173.5 million, or 76 cents a share, from $155.5 million, or 67 cents, a year earlier, New York-based Moody’s said today in a statement distributed by Business Wire. The average forecast of six analysts in a Bloomberg survey was for earnings of 69 cents.

Moody’s profits have climbed over the past two years as companies around the world take advantage of near-zero interest rates to issue more bonds, boosting demand for its credit ratings. Corporate bond issuance worldwide rose 10 percent to $1.17 trillion in the first quarter from $1.06 trillion a year earlier, according to data compiled by Bloomberg.

“While the level of activity was strong in the first quarter, we remain cautious about market conditions for the remainder of the year,” Ray McDaniel, Moody’s chief executive officer, said in the statement. The company’s earnings for 2012 will probably be at the “upper end” of $2.62 to $2.72 a share, he said.

The company said revenue increased 12 percent to $646.8 million for the quarter, from $577.1 million in the corresponding period of 2011. Its credit-rating unit accounted for $452.7 million of the total, a jump of 10 percent from last year.

Housing’s Earnings Toll

Moody’s full-year profit of $571.4 million for 2011 was an increase of 42 percent from two years earlier. Annual earnings peaked at $753.9 million in 2006, before the collapse of the housing market all but halted issuance of the complex mortgage- backed securities that banks pay the company to evaluate.

Revenue at Standard & Poor’s, the largest credit-ratings company, rose 5 percent to $466 million in the first quarter, the New York-based unit of McGraw-Hill Cos. announced on April 24.

Moody’s shares have climbed 17 percent in the past year to $41.97 as of yesterday. Warren Buffett’s Berkshire Hathaway Inc. is the company’s biggest shareholder, with a 13 percent stake worth about $1.2 billion, Bloomberg data show.

(Moody’s will hold a conference call for analysts and investors at 11:30 a.m. New York time. To listen, access the company’s website at http://ir.moodys.com)

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

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