Credit rating agency Moody’s Investor Services Friday downgraded the senior unsecured debt ratings on McDonald’s Corp. (NYSE: MCD) from A2 to A3 and short-term commercial paper has been dropped from Prime-1 to Prime-2. The ratings outlook on the company is Stable.

Moody’s initiated its review of McDonald’s debt ratings on May 4, just hours after the company announced the first steps in its turnaround plan. At the time Moody’s said:

[Moody’s has] placed all ratings of McDonald’s Corporation (McDonald’s) on review for downgrade following the company’s recent announcement to accelerate its shareholder based initiatives, which Moody’s views as the adoption of a more aggressive financial policy, that will require higher than expected debt levels and result in a material deterioration in credit metrics and could limit its financial flexibility.

Moody’s said that Friday’s actions are the result of that review and that the review is now concluded.

In addition to refranchising more than 3,500 hundred company-owned restaurants, McDonald’s turnaround plan includes cutting costs by an annual total of $300 million by 2017 as a result of the reorganizational restructure, refranchising and cost savings, and returning $8 billion to $9 billion to shareholders this year and “to reach the top end of its 3-year $18 to $20 billion cash return to shareholders target by the end of 2016.”

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Those capital returns are exactly what Moody’s drew a line under Friday morning:

Overall, Moody’s views this accelerated share repurchase and guidance to the high end of the payout range as McDonald’s adopting a more aggressive financial policy towards shareholders that will result in significantly higher debt levels and weaker credit metrics during a period of continuing operating weakness.

The ratings agency estimates that the additional debt required to fund the acceleration of its shareholder initiative would result in leverage on a debt-to-EBITDA basis approaching three times and retained cash flow-to-total debt of well under 15%.

Moody’s said that if there is a sustained improvement in operating performance and positive same-store sales to drive stronger earnings, the ratings could be lifted. However, a further downgrade is possible if same-store sales experience “sustained weakening” or credit leverage approaches 3.25 times or the ratio of retained cash flow to total debt tumbles well below 15%.

McDonald’s stock traded up about 0.4% in the early afternoon Friday, at $98.12 in a 52-week range of $87.62 to $103.39.

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