* CEO sees challenging 2009, some issuance recovering
* Shares rise 7 percent (Adds CEO comments, updates share rise)
By Jonathan Stempel
NEW YORK, Feb 5 (Reuters) - Moody"s Corp (MCO.N), the parent of Moody"s Investors Service, said fourth-quarter profit fell 30 percent as demand plummeted for new bond ratings, and projected 2009 profit that would fall short of analysts" expectations.
But profit topped analysts" forecasts for the fifth straight quarter, and Moody"s shares were up 7 percent in midday trading.
Moody"s and rivals including McGraw-Hill Cos" (MHP.N) Standard & Poor"s and Fimalac SA"s LCBP.PA Fitch Ratings are suffering from deteriorated credit markets. This has caused investor and issuer demand to substantially disappear for a wide variety of riskier securities, including collateralized debt obligations, residential mortgage securities, commercial real estate finance and credit derivatives, and junk bonds.
"It is a difficult environment for many, many institutions that are operating in the capital markets," Moody"s Chief Executive Raymond McDaniel said on a conference call.
He said he expects "unusually challenging conditions" to persist for much of 2009, and for now is seeing strong demand primarily among investment-grade issuers, a "narrow slice of what we would normally see."
Warren Buffett"s Berkshire Hathaway Inc (BRKa.N) (BRKb.N) is the largest investor in Moody"s, with a 20 percent stake as of Sept. 30, according to Thomson ShareWatch.
Fourth-quarter net income at New York-based Moody"s fell to $88.7 million, or 37 cents per share, from $127.3 million, or 49 cents, a year earlier.
Revenue dropped 20 percent to $403.7 million, while expenses fell just 5 percent. Ratings revenue fell 42 percent in structured products and 37 percent in corporate finance.
Analysts on average expected profit of 32 cents per share on revenue of $383.1 million, according to Reuters Estimates.
Moody"s projected 2009 profit per share of $1.40 to $1.50, down from $1.87 in 2008, with revenue down by a low single-digit percentage from $1.76 billion in 2008. Analysts expected 2009 profit of $1.57 per share on revenue of $1.68 billion.
New York-based McGraw-Hill on Jan. 27 posted an 18 percent drop in quarterly profit and said revenue in its credit market services unit fell 24 percent to $396.3 million.
Moody"s, S&P and Fitch are trying to restore confidence in their ratings, amid criticism from investors, regulators and politicians that they fueled the credit crisis by assigning high ratings to risk debt for years, only to rapidly downgrade them later.All three agencies have changed their methods in the last year. U.S. and European regulators have proposed reforms such as forcing rating agencies to disclose more about the assumptions they use to rate securities.
Moody"s shares were up $1.57 at $23.69 in midday trade on the New York Strock Exchange. The shares traded as high as $42.42 as recently as Sept. 8, according to Reuters data. (Editing by Maureen Bavdek and John Wallace)
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