In its second quarter earnings report Moody’s stated that it was expecting declines in structured finance revenue of over 50% and does not see any prospects of recovery until 2009. Net income in the second quarter was US$ 135.2 million versus US$ 261 million in 2007. Overall revenues fell by 25% to US$ 487 million. Moody’s is cutting operating costs by reducing staff and compensation. It also has a stock purchasing plan in place to boost its share price.
In spite of a growing demand for transparency and conforming to new regulatory requirements, Moody’s CEO McDaniel said that compliance cost was ‘not material’. This however flies in the face of a letter which Moody’s sent to the SEC on July 28th in which is stated that the cost of compliance will be higher than what the SEC had estimated. In contrast, S&P’s response to the SEC seems to express an opposite view. Sources: Financial Times & SEC Website
BIIA Newsletter July / August 2008 Issue