Current Corporate Triple-A ratings
In the 1980’s there were more than fifty Triple-A rated non-finance companies. That is now down to only four at S&P. Automatic Data Processing, Inc. (NYSE: ADP), Johnson & Johnson (NYSE: JNJ), Exxon Mobil Corporation (NYSE: XOM) and Microsoft Corporation (NASDAQ: MSFT).
Microsoft Corporation (NASDAQ: MSFT) recently issued a $2.25 billion bond deal, and S&P quickly assigned its “AAA” rating. Moody’s gave a “Aaa” rating on the new debt issue as well. Microsoft has perhaps the lowest cost of borrowing of any major company. Despite the rise of Apple Inc. (NASDAQ: AAPL) and smartphones and tablets posing a threat, Microsoft has incredible metrics. Interestingly enough, Fitch Ratings gave ‘only’ the new issue a rating of “AA+.”
Automatic Data Processing, or ADP, is a surprise on the list due to a cyclical nature of its operation. The big stand-out name, however, is Exxon Mobil. Its “AAA” rating seems a shoe-in. Even its huge acquisition of XTO for some $41 billion did little to jeopardize its rating because its market cap is the largest in America. The company was smart because it did the deal for roughly $31 billion in stock plus it assumed $10 billion in debt.
J&J is one we are more concerned about than the ratings agencies. Moody’s said that it is still well above the Triple-A hurdle. The risk is the endless recalls. Moody’s did address this but seemed to have more concern that J&J might make acquisitions or might spend too much on buybacks. The rating remains “AAA” and its rating outlook is “Stable.”
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