Rating blues

23 April 2008 By Richard Beales Follow @richardbeales1

The rating agency s lucrative business during the structured finance boom delivered 50%plus operating margins. They have now deflated, but only to a stillhealthy 46% in the first quarter. With plenty of fallout still to come, it could be hard to stop them falling further.

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Moody's reported first quarter revenue of $430.7m, 26% down on the same period in 2007. Global structured finance revenue tumbled 57%. At $107.2m, the segment accounted for just 25% of the company's total revenue in the first quarter, down from more than 40% a year earlier. Operating margins came in at 46% against 52% in the first quarter of 2007.

For the full year, Moody's expects revenue to show an annual decline in the mid to highteens percent, with operating margins in the mid40s percent. The company is projecting earnings per share of $1.90$2.00 unchanged from revised guidance given in March against $2.58 in 2007 and February's earlier guidance for 2008 of $2.17$2.25.

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