Northern, WI 02/15/2013 (usmarketbuzz) – McGraw-Hill Cos.(NYSE:MHP) is set to achieve its best financial year since 2007 as more and more corporate bonds are being issued. The company has been accused by the U.S. of disinformation about the risks that are involved in mortgage bonds that are reported as sub-prime. This had let to the credit crisis in the U.S.
The income for the company in major areas has scaled up to $970.8 million in the year 2012. Sales of its bonds recorded a high figure to the tune of $3.96 trillion.
Ed Atorino, an analyst said, “Bonds are being issued on a large scale. S&P’s a cash machine.”
In 2012, the Federal Reserve had to keep the interests rates at a low value in order to upscale the economy again. As corporate issuers of bonds hastened to book profits at low values, the company benefited a lot.
The U.S. Justice Department has alleged that S&P, in its efforts to get business from premier Wall Street banks, has given higher-than-actual ratings on mortgage- backed securities and collateralize debt obligations.
Analysts have predicted that McGraw-Hill is poised to report around $1.61 billion worth of sales for three months till 31st December.
McGraw-Hill will be selling its educational arm for $2.5 billion. This leaves the ratings and financial software business to be focused on.
The company has however refused to comment on its performance.
Yields on all types of corporate debts have reached a very low figure of 3.24% by the end of December. More bonds have been issued benefiting the credit raters. Profit increased by 66% in the fourth quarter as compared to the same period in the previous year. The net income also showed an increase.
The Securities and Exchange Commission has given McGraw-Hill the designation of a Nationally Recognized Statistical Rating Organization. S&P has ratings on varied debts, which can be utilized by investors to meet regulatory requirements.
The complaint filed against McGraw-Hill reports executives dismissing all relevant, ignoring warnings from analysts and taking various measures to satisfy bond issuers.
In the complaint, fees charged for grading a residential mortgage-backed security reached $150,000 and that for rating a collateralize-debt obligation, reached $750,000.
Speaking on the case filed against McGraw-Hill, a senior equity analyst said, “This issue is going to stay here. And frankly, it’s more likely going to get worse because we don’t know how many new additional lawsuits are going to be filed going forward.”
McGraw-Hill Cos.(NYSE:MHP) shares were down by 0.18% and currently trading at $44.78.
