Moody’s was one of three rating agencies to turn down Gramercy’s offer to pay for ratings on long-defaulted debt

Moody’s has axed 30 staff across its business as the rating agency seeks to contain costs after a challenging start to the year, according to people briefed on the situation.

The job cuts are concentrated among analysts but include some staff from other areas of the company.


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Moody’s, which issues ratings and research across a range of bonds and other securities, struggled at the start of the year, after widespread market turmoil curtailed the issuance of bonds and structured products, cutting the company’s income from rating new transactions.

The pace of new deals has picked up in recent months but Moody’s executives highlighted concerns over political risks, including the US presidential election, at an investor conference on Wednesday, at which they also discussed plans to rein in expenses.

Some cost savings would come from using employees in lower-cost locations such as India, Sri Lanka, China and Costa Rica, said Linda Huber, Moody’s chief financial officer, according to a Bloomberg transcript of the event.

“We haven’t liked the way the revenues have come in . . . we realised we have to work on expenses because we’ve had a tougher time with revenue,” she said.

First-quarter revenue missed analysts’ estimates by $37m, coming in at $816m. Revenues recovered in the second quarter, beating estimates by $25m at $929m, according to Bloomberg data. The company’s share price is up 9 per cent for the year but fell 0.4 per cent on Wednesday despite it raising its full-year earnings outlook at the investor conference.

“Increased issuance activity combined with a greater impact from our cost savings initiatives has resulted in a modestly improved outlook,” said Raymond McDaniel, Moody’s chief executive, in a statement.

The move to axe analysts in an effort to cut costs is unusual for the company, which rarely engages in large-scale firings, according to the people. Moody’s has about 1,600 analysts in total, according to regulatory filings.

Moody’s is separately under investigation by the Department of Justice for allegedly inflating credit ratings on mortgage bonds that were at the centre of the 2008 financial crisis. Rival rating agency S&P Global Ratings, has already settled over similar allegations, paying out $1.5bn.

John Goggins, general counsel at Moody’s, was asked about the investigation at Wednesday’s investor conference. He said it was not appropriate to comment on the ongoing investigation but Moody’s would make appropriate disclosures in the event of material developments in any litigation matter.

Moody’s declined to comment on the job cuts.

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