Moody's cuts profit forecast on market volatility after solid first quarter

(Reuters) -Moody's reported higher first-quarter profit on Tuesday, on strong momentum in its analytics unit and a pickup in bond issuance, but it tempered expectations for the year due to the market volatility.

Shares of the financial insights company, best known for rating the creditworthiness of corporate and government bonds, fell 2% before the opening bell.

The forecast cut comes as fears of disruption from fluctuating U.S. trade policy have led companies to pause debt issuance.

Moody's results are closely scrutinized by traders looking to assess bond market trends as they can be a reliable gauge of debt appetite given the company's wide reach.

It now expects to earn between $13.25 and $14 per share for 2025, excluding one-time costs. It had earlier forecast earnings of $14 to $14.50 per share.

Since many of Moody's customers are economy-sensitive companies such as banks and insurers, a prolonged economic downturn could hurt all its businesses, J.P. Morgan analysts had warned in a note.

In the reported quarter, however, profit attributable to the company grew 8% to $625 million, or $3.46 per share, compared with $577 million, or $3.15 per share, a year ago.

Revenue from the analytics segment climbed 8% to $859 million. The unit provides crucial stability for Moody's during times of volatility, as it chiefly depends on fixed subscriptions and is less susceptible to market fluctuations.

"Though we are facing a period of increased volatility, we run our business across market cycles," CEO Rob Fauber said.

The Moody's Investors Service business, which issues credit ratings, fetched $1.07 billion of revenue, 8% higher than last year.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)