Bangkok--20 Apr--Standard & Poor's
Yesterday, Standard & Poor's Ratings Services announced that it revised its 'AAA' sovereign credit rating outlook on the United States of America to negative from stable (see "United States of America 'AAA/A-1+' Rating Affirmed; Outlook Revised To Negative," April 18, 2011). Today, the rating agency said that yesterday's sovereign outlook revision will not affect its ratings or stable rating outlooks on the four remaining U.S.-domiciled 'AAA' rated nonfinancial corporate issuers: Automatic Data Processing Inc. (ADP), ExxonMobil Corp., Johnson & Johnson, and Microsoft Corp.
As a general matter, a change in the credit rating or outlook on a sovereign issuer does not necessarily lead to a change in the rating or outlook on other similarly rated issuers located in that country (see "A Closer Look At The Revision Of The Outlook On The U.S. Government Rating," April 18). Furthermore, Standard & Poor's continues to view transfer and convertibility risk--the risk that the U.S. government would limit the ability of other issuers to secure foreign exchange to make debt-service payments--as remote.
Given the global business profile and the significant financial strength of Exxon Mobil, Johnson & Johnson, and Microsoft, our long-term rating outlook for these U.S. domiciled corporate issuers remains stable. Standard & Poor's other U.S.-domiciled 'AAA' rated issuer, ADP, although less diversified by product line and geographical business mix, continues to have high customer and end-market diversification. In addition, the company has exhibited strength in a period of economic stress and has minimal reliance on the public sector, with a set of products for which demand is relatively inelastic. As such, our rating outlook for ADP is also maintained at stable.
In line with the above rating outlook revision for the United States of America, we have revised our 'AA' rating outlooks on Army & Air Force Exchange Service, Marine Corps Community Services, and Navy Exchange Service Command to negative from stable (see Standard & Poor's individual research reports on these entities, published earlier today).
In the future, Standard & Poor's could decide to revise its rating outlooks for other U.S. domiciled corporate issuers that exhibit a meaningful linkage to a potentially weakening U.S. government credit standing. We do not currently expect many such actions, however.
Media Contact:
Mimi Barker, New York (1) 212.438.5054,
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Analyst Contacts:
Philip Schrank, New York (1) 212-438-7859
Patrick Jeffrey, CFA, New York (1) 212-438-7840
David Lugg, New York (1) 212-438-7845