A debt-free balance sheet with more cash than the combined funds of every AAA-rated U.S. company failed to win Apple Inc. the bond market's highest credit grade as the iPhone maker prepares to borrow to enrich shareholders.
Apple, which has $145 billion of cash, said yesterday it plans to use debt to help finance a $100 billion capital reward for shareholders after a 42 percent stock plunge. Moody's Investors Service and Standard & Poor's responded by ranking the company a level below their top grades, with Gerald Granovsky of Moody's citing "shifting consumer preferences" in a statement as a risk to Cupertino, California-based Apple's business.
The decisions give Apple lower ratings than Microsoft Corp., Johnson & Johnson, Exxon Mobil Corp. and Automatic Data Processing Inc., whose combined debt of $42 billion accounts for about 13 percent of their equity. Apple could borrow more than $17 billion and still maintain a ratio below that, according to data compiled by Bloomberg.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
- Exclusive discounts on ALM and Treasury & Risk events.
- Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
*May exclude premium content
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
