Moody's Profit Beats Quarterly Estimates

Features Reuters

Credit rating agency Moody's Corp reported a better-than-expected quarterly profit, driven by strong growth in its analytics business and higher debt issuance in the United States.

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The company also forecast full-year earnings per share of $4.55 to $4.65, largely above the average analyst estimate of $4.57.

Shares of Moody's were up 4.8 percent at $97.78 on the New York Stock Exchange.

The analytics division, which sells financial research and data for assessing risk, reported a 23 percent rise in revenue to $312.4 million in the fourth quarter ended Dec. 31.

Strong financial service offerings and a jump in corporate dealmaking boosted Moody's analytics unit, according to Benchmark Co analyst Edward Atorino.

The rating company has ramped up its financial services business by buying analytics software provider Lewtan Technologies in October and U.S. loan origination software maker WebEquity Solutions in June.

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Revenue from the bond ratings business, the company's largest, rose 7.4 percent to $565.1 million. The business accounts for about 64 percent of total revenue.

"Bond issuance headed up despite slow start to the fourth quarter and had a good strong finish and company had growth in non-rating side," said Atorino.

Bond markets globally have been volatile due to plunging oil prices and worries about Greece.

However, high-grade corporate debt offerings in the United States totaled $1.1 trillion in 2014, an increase of 9 percent from a year earlier, according to Thomson Reuters data.

The U.S. Department of Justice is investigating Moody's Investors Services for issuing favorable grades on mortgage deals in the lead-up to the financial crisis, but the probe remains at an early stage.

Rival Standard & Poor's Ratings Services, a unit of McGraw Hill Financial Inc, said earlier this week that it would pay $1.5 billion to resolve a collection of lawsuits over its ratings on mortgage securities that soured in the run-up to the 2008 financial crisis.

Net income attributable to Moody's rose 14 percent to $236.3 million, or $1.12 per share, in the fourth quarter.

The company's revenue rose 13 percent to $877.5 million.

Analysts on average had expected earnings of 95 cents per share, according to Thomson Reuters I/B/E/S.

Moody's authorized a $1 billion share buyback program and raised its quarterly dividend by 21 percent to 34 cents in December. (Reporting by Neha Dimri in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)