Moody’s Soars on Higher Profit Outlook as Bond Sales Surge

Moody’s Corp. (MCO) climbed as much as 8.3 percent after boosting its outlook for 2012 earnings and reporting third-quarter profit increased 41 percent as corporate-bond sales soared.

The world’s second-largest provider of credit ratings rose 4.8 percent to close at $47.89 in New York after earlier reaching $49.50, the highest intraday level since October 2007. The stock has gained 42 percent this year.

Companies from the U.S. to Europe to Asia tapped debt markets at the fastest pace ever in a third quarter with worldwide corporate issuance at $991.4 billion, according to data compiled by Bloomberg. The Federal Reserve has held its target rate for overnight loans among banks between zero and 0.25 percent since December 2008 to spur economic growth after the longest recession since the 1930s.

“Rates are low, the market appetite for yield is high, and refinancing is taking place,” Peter Appert, an analyst with Piper Jaffray & Co. in San Francisco, said in a telephone interview before the results were announced. “Debt issuance is what drives the revenue numbers at Moody’s.”

Net income climbed to $183.9 million from $130.7 million a year earlier, the New York-based company said today in a statement distributed by Business Wire. Profit was 81 cents per share, exceeding the average estimate of 62 cents in a Bloomberg survey of analysts. The New York-based company boosted its outlook for 2012 earnings per share to a range of $2.95 to $3.05, from a previous range of $2.76 to $2.86.

Revenue Rises

Moody’s said revenue rose 30 percent to $688.5 million for the quarter, from $531.3 million in the year earlier period. The firm’s analytics unit, which sells software and consulting services, accounted for $215 million of that total, up 20 percent from a year earlier. Ratings from Moody’s Investors Service account for about 70 percent of the firm’s revenue in 2011, according to data compiled by Bloomberg.

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) is Moody’s biggest shareholder, with a 13 percent stake, worth about $1.4 billion, Bloomberg data show.

The largest credit-ratings company, Standard & Poor’s, a New York-based unit of McGraw-Hill Cos., is scheduled to report earnings Oct. 31.

To contact the reporter on this story: Matt Robinson in New York at Mrobinson55@bloomberg.net

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

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