We believe that Moody's remains a solid franchise in rating debt instruments and will show substantial growth with its diversified credit research business model and international growth.

The company raised its outlook for fiscal 2009, for the second time this year, due to continuing strength in corporate debt issuance. Earnings per share, is expected to range between $1.60 and $1.68, up from its previous outlook of $1.45 to $1.55. Revenues for the full year are expected to be flat year-over-year, versus the previous expectation of a decline in the mid-single-digit percentage range. Recurring revenue is expected to be stable. Moreover, the company expects bond activity to remain strong, going forward.

Although, over the longer-term, Moody's remains a solid franchise and will show substantial growth, we maintain a cautious approach as margins may be under pressure due to incremental costs related to regulatory issues in 2010. The company expects to incur incremental expenses of approximately $15 million to $25 million in 2010 related to regulatory issues.

Despite signs of revival in economic conditions, a recovery in debt markets is expected to be slow as they face a tempered credit environment. Moreover, we don't expect a major improvement in Moody's Structured Finance business.

Over the last five years, Moody's shares have traded in a range of 9.9X to 36.3X trailing 12-month earnings. We reiterate our Neutral recommendation on the stock with a target price of $25.00, based on a P/E multiple of 13.8X 2010 earnings, a discount to the peer group.

Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Investment Research.See all today's Analyst Blog entries.

National Bank of Greece Aa3 local and foreign currency deposit ratings

National Bank of Greece A2 preferred stock rating

National Bank of Greece Aa3 backed (government-guaranteed) debt

NBG Finance plc

Aa3 backed senior unsecured debt rating

NBG Finance plc

A1 backed subordinated debt rating

National Bank of Greece Funding Ltd.....A2 backed preferred stock rating

EFG Eurobank Ergasias SA

A1 long-term deposit rating

EFG Eurobank Ergasias SA

A1 backed (government-guaranteed) debt

EFG Hellas Plc

A1 backed senior unsecured debt rating

EFG Hellas Plc

A2 backed subordinated debt rating

EFG Hellas (Cayman Islands) Ltd A1 backed senior unsecured debt rating

EFG Hellas (Cayman Islands) Ltd A2 backed subordinated debt rating

EFG Ora Funding Limited II

A1 backed senior unsecured debt rating

EFG Hellas Funding Ltd

A3 backed preferred stock rating

Alpha Bank SA

A1 backed (government-guaranteed) debt

The move reflects the downgrade review placement of Greece's A1 foreign and local currency ratings.

The agency previously used the local currency deposit ceiling, which is Aaa for Greece, as the main factor in evaluating the capacity of a central government to back a country's banks. Yet, the agency's new methodology assumes greater significance of a government's local currency debt rating in assessing its ability to extend systemic backup.

The anchor used for gauging the Greek government's capacity to provide systemic support is now its A1 bond rating, on downgrade review, plus a one-notch uplift, resulting in a Aa3 input, Moody's said. The agency notes that this "ability to support indicator" captures the worsening of the government's fiscal position, with indebtedness of over 108% of the gross domestic product (GDP) and a growing fiscal deficit, which could erode its capacity to allocate resources and back the banking system.

"The current rating action reflects the likelihood that a downgrade of the government's ratings would lead to a downgrade of the ability to support indicator, which could, in turn, result in a downgrade of the ratings benefiting from uplift: deposit and debt ratings of National Bank of Greece, EFG Eurobank Ergasias and Emporiki Bank," Moody's said. The agency stressed that Emporiki Bank's ratings were already on review for possible downgrade due to its deteriorating financial performance.

The government-guaranteed bonds of Alpha Bank AE were also affected, as the backed A1 rating is aligned with the current rating for Greece, the agency said. Thus, the rating was also placed on review for possible downgrade.

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Moody's also confirmed Ford Credit de Mexico's MX-4 short-term national scale debt rating.

The Mexican subsidiary's debt ratings reflect an irrevocable and unconditional parental guarantee, Moody's said.

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The notes carry a fixed 4.50% coupon and mature on 10 November 2014. They benefit from a guarantee provided by the parent and its wholly-owned subsidiary Woodside Energy Ltd.

The instrument is aimed at paying off short-term debt. Besides, the amount raised through it will go for general corporate purposes, including capital spending.

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