Moody's Raises Outlook, Cites Bond Issuance Strength

Thursday, 06 Jan 2011 08:52 AM

 

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Moody's Corp. raised its 2010 outlook, citing strong fourth-quarter bond market issuances benefiting its ratings agency.

The company expects to report full-year earnings per share of $2.08 to $2.14, compared with its previous view of $1.90 to $1.96.

Analysts on average are expecting a profit of $1.91 a share, according to Thomson Reuters I/B/E/S.

Revenue in 2010 is seen to rise by about 13 percent from 2009, and operating margin is expected to remain in the high 30s percentage range, New York-based Moody's said on Thursday.

The higher 2010 profit and revenue expectations come as U.S. debt issuance has spiked over the last year, even as the three major domestic ratings agencies remain at the center of controversy.

Critics argue the agencies did not properly rate risky securities — particularly complex mortgage-backed securities — during the housing boom that contributed to the 2008 financial crisis.

David Einhorn, founder of $6.5 billion hedge fund Greenlight Capital, told Reuters last month that he began shorting ratings agencies in 2007 and would continue to do so.

If the ratings agencies disappeared, he said, "nothing bad would happen."

Shares of the ratings agency, which have risen about 3 percent since the company reported its third-quarter results in October, closed at $27.32 in Wednesday New York Stock Exchange trading.

Moody's shares declined 1.9 percent in 2010, trailing the broader market.

The company will announce fourth-quarter and full-year earnings on Feb. 3.

© 2014 Thomson/Reuters. All rights reserved.

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