Moody's says debt issuers holding off on transactions as interest spreads continue to widen

By Jennifer Lanning Drey

Portland, Ore., Oct. 29 - Moody's Corp. chief executive officer Raymond McDaniel said the firm saw many speculative-grade and investment-grade debt issuers delay transactions in September and October as interest spreads widened.

Non-government debt issuance was down more than 40% in September from already depressed levels a year ago, McDaniel said during the firm's third-quarter earnings conference call held Wednesday.

Spreads for investment-grade industrial debt are approaching levels not seen since the 1930s, while spreads over Treasuries for speculative-grade debt reached a record 1,600 basis points in mid-October, he noted.

"In recent weeks, the financial system has experienced significant additional turmoil as core problems in credit have been amplified by a much wider crisis in confidence and deceleration in macro-economic activity," he said.

The company's third-quarter revenue was $433.4 million, down 17% from the same quarter of 2007, as strength in public infrastructure finance and growth from Moody's analytics was more than offset by limited issuance of structured finance securities and speculative-grade bonds and bank loans, McDaniel said.

During the call, the CEO said the timing for recovery remains uncertain but has probably been extended by recent developments.

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