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Moody’s profit soars, forecasts strong 2013 results

Credit rating agency Moody's Corp, which could face a federal lawsuit tied to pre-crisis ratings, said quarterly profit jumped 66 per cent and the company forecast strong 2013 earnings, sending its shares up 2 per cent before the bell.

Moody's said it expects full-year earnings in the range of $3.45 (U.S.) to $3.55 per share. The company expects a full-year revenue growth rate in the high single digits.

Net income rose to $160.1-million, or 70 cents per share, in the fourth quarter, from $96.2-million, or 43 cents per share, a year earlier.

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Revenue rose 33 per cent to $754.2-million.

Moody's has been benefiting as companies refinance debt to take advantage of rock-bottom interest rates to access cheap funding.

Revenue in its global corporate finance business rose 73 per cent to $244.9-million.

The company's stock has slumped since the U.S. government launched a $5-billion civil suit against rival Standard & Poor's and parent McGraw-Hill Companies Inc. over mortgage bond ratings tied to the financial crisis.

The U.S. Justice Department and multiple states are discussing suing Moody's for defrauding investors, Reuters reported on Thursday, citing people familiar with the matter, but any such move will likely wait until the lawsuit against S&P is tested in the courts.

Moody's and S&P have long faced criticism from investors, politicians and regulators for assigning high ratings to thousands of subprime and other mortgage securities that quickly turned sour.

Moody's shares rose 2 per cent to $47.95 in trading before the bell. They closed at $46.99 on the New York Stock Exchange on Thursday.

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