An improving financing environment for bond issuers and narrowing credit spreads contributed to an uptick in revenue for rating agencies. 

S&P’s third quarter revenues declined 2.2% to $637.0 million compared to the same period last year. Operating profit decreased by 10.1% to $256.2 million compared to $285.1 million for the third quarter last year, which included a pre-tax restructuring charge of $4.1 million.  

S&P’s Credit Market Services, which provides independent credit ratings, credit risk evaluations and ratings-related services, increased revenue by 0.7% to $426.1 million in the third quarter compared to the same period last year.  For the nine months of 2009 S&P’s total revenues are still down by 5.4%.Moody’s reported revenue of $451.8 million for the three months ended September 30, 2009, an increase of 4% from $433.4 million for the third quarter of 2008.  The increase in revenue is a result of continuing strength in corporate debt issuance.  Moody’s revenue for the first nine months of 2009 totaled $1,311.4 million, a decrease of 3% from $1,351.7 million for the same period of 2008. Expenses for the first nine months of 2009 were $802.8 million, an increase of 10% from a year ago. Year-to-date operating income of $508.6 million was down 18% from $622.8 million for the same period of 2008.

Berkshire Hathaway Inc. has sold almost 1.2 million shares of Moody’s stock as it keeps cutting its stake in the company.  Warren Buffet stated some time ago that he was disenchanted with Moody’s because it had damaged its brand.  Berkshire revealed the sales in documents filed October 30th with the Securities and Exchange Commission. The latest sales were completed Wednesday and Thursday at prices ranging between $24.86 and $25.27 per share. Following the sales, Berkshire held 38.1 million Moody’s shares.  Berkshire has reduced its stake in Moody’s considerably since March 31 when it held 48 million shares. Moody’s shares closed at $23.68 on Friday Oct. 30th, down 2.4 percent.

BIIA Newsletter November 2009 Issue