Results nevertheless topped analyst forecasts. McGraw-Hill Cos , which operates Moody's main rival Standard & Poor's, on Tuesday posted a smaller-than-expected 23 percent decline in quarterly profit. Both companies also affirmed their 2008 earnings forecasts.

Second-quarter net income for New York-based Moody's, whose largest investor is Warren Buffett's Berkshire Hathaway Inc , fell to $135.2 million, or 54 cents per share, from $261.9 million, or 95 cents, a year earlier.

Moody's said profit excluding items was 51 cents per share. On that basis, analysts on average expected 47 cents per share, according to Reuters Estimates. Revenue fell 25 percent to $487.6 million, topping the average $465.7 million forecast.

The revenue decline was driven by a 56 percent plunge in revenue from structured products such as collateralized debt obligations, often tied to mortgages. In the United States alone, structured finance revenue fell 67 percent. Expenses declined 10 percent as Moody's cut jobs.

Though profit and revenue rose from the first quarter, Chief Executive Raymond McDaniel said first-half results reflected "persistently difficult" market conditions." He said Moody's was "cautious" about a credit market recovery in 2008.

Moody's still expects 2008 profit per share of $1.90 to $2.00, with revenue down by a mid- to high-teens percentage.

Moody's shares closed Tuesday at $36.15 on the New York Stock Exchange. They have risen 1 percent this year, but have fallen 52 percent from a peak of $76.09 in February 2007.

(Reporting by Jonathan Stempel; Editing by Maureen Bavdek)