Moody’s raises annual earnings forecasts on strong issuance activity, analytics strength

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(Reuters) -Ratings agency Moody’s raised its annual revenue and profit forecasts on Wednesday, on the back of strong momentum in its analytics unit and robust bond issuance activity. 

WHY IT’S IMPORTANT 

Credit spreads are a crucial gauge of the health of the corporate sector and play an important role in shaping the bond issuance environment.

Moody’s earnings results are closely watched by market participants to assess bond market trends given the agency’s wide reach in the global credit markets.

CONTEXT

Bond issuance activity was robust in the reported quarter as credit spreads remained tight while capital markets and M&A came back roaring, driving growth in Moody’s ratings business.

Private credit has also emerged as an important growth driver for Moody’s ratings business as the asset class plays an increasingly important role in funding key sectors like data center, energy, and infrastructure. 

BY THE NUMBERS 

In the reported quarter, profit attributable to Moody’s was $646 million, or $3.60 per share, compared with $534 million, or $2.93 per share, a year earlier.

Moody’s investors service business, which issues credit ratings, reported $2 billion in revenue, up 11% from a year earlier. 

The company now expects annual adjusted profit per share between $14.50 and $14.75, compared with its prior forecast of $13.50 to $14.00.

Revenue growth is expected to be in high-single-digit percent range, compared with earlier expectations of mid-single-digit percent range.

KEY QUOTE

“The power of the Moody’s franchise was on full display this quarter. The investments we’ve made to capitalize on several deep currents are paying off,” said CEO Rob Fauber.

MARKET REACTION 

Shares of the New York-based company rose 1.5% in premarket trading. The stock has risen 2.4% this year, as of last close.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Krishna Chandra Eluri)