Moody’s Corp., owner of the second-largest credit-ratings company, climbed to a record after reporting fourth-quarter profit that beat analysts’ estimates.
Shares surged 6.3 percent to $81.59 as of 10:43 a.m. in New York. Moody’s rallied 55.9 percent last year, almost double the 29.6 percent gain in the Standard & Poor’s 500 index.
Net income climbed to $206.7 million from $160.1 million a year earlier, the New York-based company said today in a statement. Profit excluding certain items was 85 cents per share, exceeding the average estimate of 76 cents in a Bloomberg survey of 10 analysts.
Since 2008, Moody’s has reported five straight years of increasing annual sales as companies tapped debt markets to take advantage of record-low borrowing costs. Revenue reached a record in the fourth-quarter on higher sales for structured-products rankings.
Moody’s said sales rose 3.3 percent to $779.2 million for the quarter, from $754.2 million in the period a year earlier. Ratings revenue from company bond sales slipped 1 percent to $242.6 million from $244.9 million, while sales from structured products increased 6 percent to $108.8 million from $102.9 million.
Gains from structured securities were boosted by a rise in issuance of commercial mortgage-backed debt and real-estate investment trusts, the company said in the statement. Sales from Moody’s Investors Service account for about 70 percent of the firm’s revenue.
Competitor McGraw Hill Financial Inc., owner of the largest credit-rating company, reported fourth-quarter profit on Feb. 4 that exceeded analysts’ estimates even as ratings revenue decreased 2 percent to $574 million from the year-earlier period. Shares rose the most in about a year after the New York-based company reported net income of $171 million, up from a loss of $216 million in the year-earlier period, which included a charge on the sale of its education unit.
Corporate bond sales in the U.S. slowed to $319.6 billion in the three months ended Dec. 31 from unprecedented fourth-quarter issuance of $388.1 billion that closed out 2012, 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. Yields on debt from the most creditworthy to the riskiest U.S. borrowers averaged 3.84 percent last year, below the five-year average of 5.11 percent since December 2008, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Index.
Warren Buffett’s Berkshire Hathaway Inc. is Moody’s biggest shareholder with an 11.6 percent stake valued at about $1.9 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)