Second-quarter earnings at

Moody's

(MCO) - Get Report

rose 18%, as the big bond rating agency issued an optimistic profit outlook for the second half of the year.

In the quarter, Moody's earned $172.1 million, or 59 cents a share, up from $145.4 million, or 47 cents a share, in the year-earlier period. Revenue rose 14% to $511.4 million, a sign that corporations are continuing to issue bonds at fast clip.

Moody's earnings and revenue in the quarter came in ahead of Wall Street expectations. Analysts, as surveyed by Thomson Financial, were looking for earnings of 56 cents a share on revenue of $485.8 million.

The quarter included a $20.7 million expense related to the company's stock option grants. The stock option expense reduced net earnings by 4 cents a share, the company said.

Moody's says despite the rise in interest rates, it still expects its bond rating business to expand. The firm, which operates Moody's Investor Services, says, "we now believe that results for the full year 2006 will modestly exceed our prior forecast."

Analysts, before Moody's bullish outlook, were looking for the company to earn between $2.03 a share and $2.13 a share for all of 2006.

Revenue from rating bonds, which is most of what Moody's does, rose 14% to $413.6 million. Revenue from research work rose 19% to $62.9 million.

Operating expenses rose 15% to $222.3 million, largely because of higher personnel costs.

Shares of Moody's closed Tuesday at $54.11.