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Moody’s Benefits From Increased Debt Issuance

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Credit-rating agency Moody’s (NYSE:MCO) reported today that third quarter profits increased by 36% thanks to increased debt issuance as well as increased merger and acquisition activity.

For the third quarter ended September 30, 2010, the company recorded profits of $136 million, or 58 cents per diluted share, compared to $100 million, or 42 cents per diluted share, for the same period the previous year.  Third quarter revenue came to $513 million, up from $452 million for the year-ago period. 

Analysts expected the company to earn 45 cents per share on revenues of $472 million.

By geographical region, almost half of Moody’s third quarter revenue came from abroad.  Non-U.S. revenue was $235 million for the quarter, up 6% on a year-over-year basis while U.S revenue rose 21% year-over-year to $278.3 million.
 
Moody’s Investors Service (MIS), the Moody’s credit-rating arm, brought in $358.2 million of revenue globally during the third quarter, 17% higher than same period a year ago.  About 58% of the division’s revenue came from the U.S.  

The strong performance from MIS was driven by increased debt issuance as well as increased merger and acquisition activity.  Corporate finance revenue, which includes revenue from these activities, saw an increase of 51% year-over-year to $144.9 million in the third quarter. 

Global revenue for the Moody's Analytics (MA) unit, for the third quarter of 2010 reached $155.1 million, 6% above the same quarter of 2009.  The increase was primarily driven by the delivery of risk management software projects and improving demand for research and data. About $71.1 million of MA’s revenues was generated in the U.S.

Moody's also raised its guidance for diluted earnings per share for fiscal 2010 to a range of $1.90 to $1.96.  Furthermore, the company said it expects revenue to increase in the high-single to low-double-digit percent range. 

The company opened higher by 4% after the announcement this morning but has subsequently slipped on intraday trading to close 2% lower than yesterday’s closing price.


[4:08:16 PM] Phil: i'm not sure why it declined, although they did declare a $0.105 per share dividend today

Quick facts: Moody's Corporation

Price: 280.49 USD

NYSE:MCO
Market: NYSE
Market Cap: $52.65 billion
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