Bond ratings company Moody's Corp. posted a 37 percent rise in first-quarter profit, topping Wall Street expectations, as corporate debt issuance surged.
The company also raised its quarterly dividend and increased its full-year earnings forecast, and the news sent Moody's shares 9.4 percent higher to $39.29 in early trading on the New York Stock Exchange.
Low global interest rates are prompting companies to refinance their debt are also pushing investors to take more risk on higher-yielding corporate bonds.
McGraw-Hill Cos. Inc., which houses ratings agency Standard & Poor's, beat Street earnings estimates on Tuesday, also because of strong bond issuance. S&P estimated there will be $1.2 trillion to $1.5 trillion of U.S. and European bond and loan maturities to refinance annually from 2011 to 2014.
Moody's Investors Service, the ratings agency business at Moody's Corp., saw its revenue climb 23 percent to $412.6 million in the first quarter. Most of the gains came from rating corporate bonds, but there were also gains in long-troubled structured finance.
Moody's, S&P and Fimalac's Fitch made millions of dollars rating structured finance products like mortgage bonds during the financial crisis. Ratings agencies were criticized for giving many of those securities higher ratings than they deserved.
Moody's Corp. posted net income of $155.5 million, or 67 cents a share, up from $113.4 million, or 47 cents, a year earlier. Analysts on average expected 54 cents a share, according to Thomson Reuters I/B/E/S.
The company raised its full-year earnings forecast to a range of $2.22 to $2.32 per share, from a previous $2.12 to $2.22. It increased its quarterly dividend to 14 cents a share from 11.5 cents.
First-quarter revenue climbed to $577.1 million from $476.6 million a year earlier.
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