Moody's Profit Up 7%

The firm saw a surge in ratings work for credit derivatives.
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Bond rating firm

Moody's

(MCO) - Get Report

reported a 7% rise in third-quarter profit, due to a surge in ratings work on credit derivatives and mortgage-backed securities.

The firm earned $157 million, or 55 cents a share, up from $146.6 million, or 48 cents a share, a year ago. Revenue rose 17.5% to $495.5 million from $421.1 million.

Analysts, according to Thomson Financial, were forecasting earnings of 52 cents a share on revenue of $471.8 million.

The quarter included a 4-cents-a-share stock-related compensation charge.

Moody's also says it expects strong results for the fourth quarter of this year.

Credit derivatives are sophisticated financial contracts that are often used as way to hedge against the decline in value of a bond, stock or commodity.

"Based on Moody's stronger than expected results for the first nine months of 2006 we have made a number of revisions to our outlook for the full year 2006. For Moody's overall, we now project revenue growth in the low teens percent range for the full year 2006," the firm says.