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Slowdown in Leveraged Loan Issuance to Hurt Moody's Q2 Earnings
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Key Takeaways
MCO's Corporate Finance revenues are expected to drop 6.3% y/y on weaker leveraged loan issuance in Q2.
Structured Finance revenues to likely fall 6.1% amid lower CMBS and ABS issuance volumes.
MA revenues are projected to rise 8.7%, aided by strong demand and inorganic growth efforts.
Moody's (MCO - Free Report) is scheduled to announce second-quarter 2025 results on July 23, before the opening bell. The company’s Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division, is not expected to have witnessed much revenue growth.
In the second quarter of 2025, global bond issuance activity was somewhat healthy, but there was a notable slowdown in leveraged loan issuance activity from the previous-year quarter.
Because of lower repricing activity and an uptick in corporate debt spreads, leveraged loan issuance weakened notably. Among the other two sub-categories within non-financial corporate bonds, investment-grade loans witnessed lower volumes on a year-over-year basis while high yield issuance performed well. The Zacks Consensus Estimate for revenues in the Corporate Finance line of $492 million indicates a 6.3% decline from the prior-year quarter’s reported number.
The consensus estimate for revenues from the Financial Institutions business line of $198 million suggests a year-over-year increase of 1.5%. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business revenues of $164 million implies a 6.5% increase.
Quarterly issuance volumes for collateral debt obligations were robust in the to-be-reported quarter. However, commercial mortgage-backed securities and asset-backed securities issuance volumes declined year over year against reasonably tough comps. Hence, Structured Finance revenues are likely to have been negatively impacted. The consensus estimate for the same stands at $123 million, suggesting a 6.1% decline.
The Zacks Consensus Estimate for MIS division revenues for the to-be-reported quarter of $1.03 billion implies a 3.1% year-over-year decline.
Moody’s Other Key Factors & Estimates for Q2
Moody's Analytics (“MA”) Division: With the demand for analytics rising, revenues from all units at the MA division are expected to have increased in the second quarter. The company’s efforts to strengthen the division’s profitability through inorganic growth strategies are anticipated to have offered some support. Thus, the division’s overall revenues are likely to have risen in the to-be-reported quarter.
The consensus estimate for the MA division’s quarterly revenues is pegged at $876 million, indicating an 8.7% increase from the prior-year quarter’s actual.
Expenses: Given Moody’s inorganic growth efforts, costs related to acquisitions and restructuring are expected to have increased in the to-be-reported quarter, thus resulting in an increase in total expenses.
Key Q2 Development for Moody’s
In June, MCO fully acquired ICR Chile, strengthening its presence in Latin America’s domestic credit markets. The terms of the deal were not disclosed and the transaction will not have a material impact on Moody’s 2025 financial results.
The transaction followed Moody’s acquisition of a minority stake in ICR Chile in 2019.
Martin Fernandez-Romero, managing director of Moody’s Local, stated, “Today’s acquisition builds on our successful partnership with ICR and underscores our commitment to Chile’s growing debt capital market. Bringing ICR into Moody’s Local will enhance our ability to provide high quality credit ratings, research, and analytical services to market participants, while contributing to greater transparency in Latin America.”
Earnings Whispers for Moody’s
According to our proven model, the chances of MCO beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Moody’s is +2.41%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q2 Earnings & Sales Expectations for MCO
The Zacks Consensus Estimate for earnings is pegged at $3.42, which has been unchanged over the past seven days. The figure indicates a 4.3% rise from the year-ago reported number. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The consensus estimate for sales of $1.85 billion suggests a 1.8% rise from the prior-year quarter’s actual.
Other Finance Stocks Worth a Look
Here are a couple of other finance sector stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time:
Prosperity Bancshares, Inc. (PB - Free Report) is slated to announce second-quarter 2025 results on July 23. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.33%.
The Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has been unchanged at $1.40 over the past week.
Image: Bigstock
Slowdown in Leveraged Loan Issuance to Hurt Moody's Q2 Earnings
Key Takeaways
Moody's (MCO - Free Report) is scheduled to announce second-quarter 2025 results on July 23, before the opening bell. The company’s Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division, is not expected to have witnessed much revenue growth.
In the second quarter of 2025, global bond issuance activity was somewhat healthy, but there was a notable slowdown in leveraged loan issuance activity from the previous-year quarter.
Because of lower repricing activity and an uptick in corporate debt spreads, leveraged loan issuance weakened notably. Among the other two sub-categories within non-financial corporate bonds, investment-grade loans witnessed lower volumes on a year-over-year basis while high yield issuance performed well. The Zacks Consensus Estimate for revenues in the Corporate Finance line of $492 million indicates a 6.3% decline from the prior-year quarter’s reported number.
The consensus estimate for revenues from the Financial Institutions business line of $198 million suggests a year-over-year increase of 1.5%. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business revenues of $164 million implies a 6.5% increase.
Quarterly issuance volumes for collateral debt obligations were robust in the to-be-reported quarter. However, commercial mortgage-backed securities and asset-backed securities issuance volumes declined year over year against reasonably tough comps. Hence, Structured Finance revenues are likely to have been negatively impacted. The consensus estimate for the same stands at $123 million, suggesting a 6.1% decline.
The Zacks Consensus Estimate for MIS division revenues for the to-be-reported quarter of $1.03 billion implies a 3.1% year-over-year decline.
Moody’s Other Key Factors & Estimates for Q2
Moody's Analytics (“MA”) Division: With the demand for analytics rising, revenues from all units at the MA division are expected to have increased in the second quarter. The company’s efforts to strengthen the division’s profitability through inorganic growth strategies are anticipated to have offered some support. Thus, the division’s overall revenues are likely to have risen in the to-be-reported quarter.
The consensus estimate for the MA division’s quarterly revenues is pegged at $876 million, indicating an 8.7% increase from the prior-year quarter’s actual.
Expenses: Given Moody’s inorganic growth efforts, costs related to acquisitions and restructuring are expected to have increased in the to-be-reported quarter, thus resulting in an increase in total expenses.
Key Q2 Development for Moody’s
In June, MCO fully acquired ICR Chile, strengthening its presence in Latin America’s domestic credit markets. The terms of the deal were not disclosed and the transaction will not have a material impact on Moody’s 2025 financial results.
The transaction followed Moody’s acquisition of a minority stake in ICR Chile in 2019.
Martin Fernandez-Romero, managing director of Moody’s Local, stated, “Today’s acquisition builds on our successful partnership with ICR and underscores our commitment to Chile’s growing debt capital market. Bringing ICR into Moody’s Local will enhance our ability to provide high quality credit ratings, research, and analytical services to market participants, while contributing to greater transparency in Latin America.”
Earnings Whispers for Moody’s
According to our proven model, the chances of MCO beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Moody’s is +2.41%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q2 Earnings & Sales Expectations for MCO
The Zacks Consensus Estimate for earnings is pegged at $3.42, which has been unchanged over the past seven days. The figure indicates a 4.3% rise from the year-ago reported number. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Moody's Corporation Price and EPS Surprise
Moody's Corporation price-eps-surprise | Moody's Corporation Quote
The consensus estimate for sales of $1.85 billion suggests a 1.8% rise from the prior-year quarter’s actual.
Other Finance Stocks Worth a Look
Here are a couple of other finance sector stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time:
Prosperity Bancshares, Inc. (PB - Free Report) is slated to announce second-quarter 2025 results on July 23. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.33%.
The Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has been unchanged at $1.40 over the past week.
Associated Banc-Corp (ASB - Free Report) has an Earnings ESP of +0.81% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report second-quarter 2025 results on July 24. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past seven days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has been unchanged at 62 cents.