Moody's encouraged by recent activity but says recovery to be limited

By Jennifer Lanning Drey

Portland, Ore., April 29 - Moody's Corp. was encouraged by increased debt market activity seen during the first quarter in investment-grade credit, but still expects a recovery to be limited in 2009, as other areas of the debt markets remained largely inactive, Raymond McDaniel, chief executive officer of Moody's, said Wednesday during its quarterly earnings conference call.

Moody's first-quarter revenues of $408.9 million reflected some improvement in credit market activity as compared to the fourth quarter, despite the broader economic downturn, he said.

In Moody's global corporate finance segment, revenues increased by 15% over the same period last year as the narrowing of investment-grade spreads drove an increase in high-grade issuance, which was mainly done to refinance upcoming maturities, Linda Huber, chief financial officer of Moody's, said during the call.

High-yield and bank loan activity remained very limited during the quarter, she said.

Huber also noted Moody's U.S. global financial institutions revenue was down 26% from the prior-year quarter due to issuance declines in the insurance and banking sectors.

Regulatory developments

Also during Wednesday's call, McDaniel said the Securities and Exchange Commission held a public roundtable on credit ratings agencies in April. The roundtable focused on issues including compensation, oversight of ratings agencies, alternative business models, use of ratings in regulation and the SEC's proposed rules on disclosure and ratings performance history, he said.

The SEC has indicated it will consider those as well as other topics, including proposing additional regulation to help assure that the interests of credit ratings agencies are aligned with those of ratings users, possibly in the summer of 2009.

Moody's will continue to comply with rules and regulations adopted by legislators in light of its shared goal of achieving greater market stability and seeing a return of investor confidence, he said.

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