Standard & Poor’s may have done the inevitable move of a U.S. credit ratings downgrade and it may have followed with the downgrade of the insurance companies and with many government agencies and dependent entities. Generally speaking, S&P does not allow “AAA” ratings for companies in nations where the “AAA” rating does not exist for the sovereign nation. We had been given indications that there would be exceptions on this downgrade, but S&P has said that it is not downgrading six of the highest rated non-financial corporate issuers:
- Automatic Data Processing Inc. (NYSE: ADP) at AAA/Stable/A-1+
- ExxonMobil Corporation (NYSE: XOM) at AAA/Stable/A-1+
- Johnson & Johnson (NYSE: JNJ) at AAA/Stable/A-1+
- Microsoft Corporation (NASDAQ: MSFT) at AAA/Stable/A-1+
- General Electric Co. (NYSE: GE) at AA+/Stable/A-1+
- W.W. Grainger Inc. (NYSE: GWW) at AA+/Stable/A-1+
S&P noted that these companies would be able to meet their ability to fulfill their financial obligations even if a sovereign default scenario arises. S&P called these out as having excellent business risk profiles.
Even before the downgrade from S&P, it was our assumption that a downgrade was coming. We even gave a list of the other “AAA” nations and outlined four more nations we think may lose their “AAA” ratings based on collateral damage. If we are not “AAA” there are other “AAA” ratings that aren’t deserved as well.
JON C. OGG
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