Moody's Corp. (NYSE:MCO), the second-largest credit rater, posted a 9 percent profit jump in the first quarter that surpassed analysts' projections as demand for credit ratings increased on a wave of corporate debt issues. Shares advanced in early trading.
Net income in the three months that ended March 31 increased to $188.4 million, or 83 cents a share, from $173.5 million, or 76 cents a share, a year earlier, the New York-based ratings agency said in a statement on Friday. Taking out certain items, including a 14-cent charge tied to litigation settlements, earnings were 97 cents a share, beating the 85 cents a share analysts on average had predicted.
Last month, the ratings firm agreed to pay $75 million to settle cases alleging it had inflated and hid risks in mortgage-related deals.
Revenue for the January-to-March period jumped 13 percent to $731.8 million from $646.8 million. Analysts were modeling $718 million in revenue.
U.S. revenue grew 18 percent to $406.1 million, whereas international revenue — which accounts for 35 percent of total revenue — rose 8 percent to $325.7 million.
"Moody's results in the first quarter of 2013 reflected strong operating performance for both Moody's Investors Service and Moody’s Analytics,” the company's statement quoted CEO Raymond McDaniel as saying.
Within Moody's Investors Service, global corporate finance revenue jumped 29 percent to $258.3 million, helped by strong speculative-grade bank loan and bond issuance. Corporate finance revenue rose 25 percent in the U.S. and 36 percent outside the U.S.
And within Moody’s Analytics, revenue from research, data and analytics rose 8 percent to $129.6 million, driven by strong customer retention and solid growth from MA’s CreditView offering.
Moody's also raised its full-year adjusted earnings forecast on Friday to $3.49 to $3.59 a share. Analysts were projecting $3.51 a share. It had earlier projected earnings to be between $3.45 a share and $3.55 a share.
The ratings agency announced a quarterly dividend of 20 cents a share payable on June 10 to stockholders of record at the close of business on May 20, according to a separate statement.
Moody's shares gained 1.1 percent, reversing earlier losses, to sit at $61.70, the highest intraday price since July 2007, at 9:48 a.m. in New York on Friday after the report was announced. The stock has doubled over the past 12 months.