Why Only Two Companies Are Left With the AAA Rating — The Wall Street Insider (2024)

FAQs

How many companies have a AAA rating? ›

Lawmakers are playing chicken with the debt ceiling — and the U.S.' creditworthiness. Luckily there are still two U.S. S&P 500 companies left with perfect AAA credit ratings — a key asset with interest rates on the rise.

Currently there are only two companies in the United States with an AAA credit rating:Microsoft and Johnson & Johnson. These individual codes are grouped into broader classes described as "investment grade" or not, or in numbered tiers from high to low.

The ratings agency in 2011 made a major decision to strip away the country's AAA rating. More than a decade ago, John B. Chambers and his colleagues at Standard & Poor's made a momentous decision: They were going to strip the United States of its cherished AAA credit rating.

Johnson & Johnson's Aaa rating reflects the company's large scale and market presence, its strong product and geographic diversity, and its high margins.

S&P's AAA rating is the highest that can be assigned to any issuer of debt. It is the same as the Aaa-rating issued by Moody's. This rating is assigned to investment-grade debt that has a high level of creditworthiness. Debt issuers with the highest ratings have the strongest capacity to repay investors.

AAA-rated bonds have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default.

Premier Membership entitles you to the highest level of AAA benefits and services available. Personal assistance and travel luxuries give you the most exclusive ways to save time and money on and off the road.

Moody's now rates Tesla (ticker: TSLA) debt at Baa3, its lowest level for investment grade, up one ratings notch from Ba1, the highest level of speculative grade, or so-called junk-rated debt.

The inability of U.S. lawmakers to reach a deal has caused Fitch Ratings to put the country's AAA credit rating on negative watch. However, Fitch expects Washington to resolve the issue before June 1, when the U.S. government could start missing payments.

When did the US lose its AAA rating? ›

Friday, Aug. 5, 2011, was a sad day in American fiscal history. It was the day the credit rating firm Standard & Poor's (S&P) downgraded the credit rating of the United States from AAA to AA+.

Standard & Poor's credit rating for China stands at A+ with stable outlook. Moody's credit rating for China was last set at A1 with stable outlook. Fitch's credit rating for China was last reported at A+ with stable outlook. DBRS's credit rating for China is A (high) with negative outlook.

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The Microsoft corporate credit rating is AAA and Aaa by Standard & Poor's Rating Services and Moody's Investors Service Inc., respectively.

Major rating agencies—that is, Moody's Investors Service, Standard & Poor's, and Fitch Ratings—have policies in place that limit a corporate issuer's ability to be rated above its sovereign country debt. That is, sovereign debt ratings act as a rating “ceiling” for most corporate borrowers within their home country.

'AAA' National Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union.

The median rating for an S&P 500 company is 'BBB+', four notches higher than the median U.S. corporate rating of 'BB. The largest companies in the index tend to show very strong credit measures: Nine of the 10 largest companies in the S&P 500 by market cap are rated, with each of these rated investment-grade.

For Standard & Poor's, AAA is the best rating, followed by AA, A, BBB, BB, B, CCC, CC, and C.

An AAA doesn't usually pose a serious threat to health, but there's a risk that a larger aneurysm could burst (rupture). A ruptured aneurysm can cause massive internal bleeding, which is usually fatal. Around 8 out of 10 people with a rupture either die before they reach hospital or don't survive surgery.

What credit score should you have to be considered to be a good credit risk? ›

Lenders generally see those with credit scores 670 and up as acceptable or lower-risk borrowers. Those with credit scores from 580 to 669 are generally seen as “subprime borrowers,” meaning they may find it more difficult to qualify for better loan terms.

Today, AAA is a federation of affiliated motor clubs with more than 1,000 offices throughout the United States and Canada, serving more than 61 million members. You probably know that AAA offers outstanding roadside assistance to AAA Members in a jam.

With AAA Premier, each member is entitled to one (1) tow of up to 200 driving miles from the point of breakdown. This 200 mile tow is one of the six allowable service calls per Premier membership year. The other five calls can be up to 100 driving miles from the point of breakdown.

AAA offers three basic types of Membership, ranging in price from $64.99 to $124.99 per year. Some benefits vary, but all Memberships include emergency roadside assistance, DMV/MVD services*, trip planning by travel experts, and discounts at 120,000+ hotels, restaurants, movie theaters, and more.

Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scores, however, there is a clear winner: FICO® Score is used in 90% of lending decisions.

There's no “most important” credit bureau. Reviewing reports from all three bureaus can help you understand what information might be used to calculate your credit scores. But remember, lenders have their own criteria to decide on things like loan and credit applications.

Your Equifax credit score is more likely to appear lower than your TransUnion one because of the reporting differences, but a “fair” score from TransUnion is typically “fair” across the board.

Tesla doesn't list a minimum credit score to be approved for financing, however, typically your shot of being approved will increase if your score is in the 600s or better. It could be possible with a 500 score still, though not as likely.

Currently, Ford has a total long-term debt of $140 billion, while GM is right behind with $115 billion in the same category. Tesla, on the other hand, has just $5 billion in long-term debt, and plenty of cash to show for it.

Tesla does not disclose the minimum credit score required to qualify for financing. As with most lenders, however, you will have a better chance of qualifying if your scores are in the mid-600s or higher.

Who owns the US debt? ›

Investors in Japan and China hold significant shares of U.S. public debt. Together, as of September 2022, they accounted for nearly $2 trillion, or about 8 percent of DHBP. While China's holdings of U.S. debt have declined over the past decade, Japan has slightly increased their purchases of U.S. Treasury securities.

Stop me if you've heard this one before: In the wake of a grueling battle over lifting the debt ceiling in 2011, the credit rating agency Standard & Poor's downgraded the nation's credit rating for the first time, reducing the prized AAA rating for the world's largest economy to one notch below, at AA+.

Microsoft's strong record of earnings per share increases helps the company hold its AAA credit rating. Since Microsoft has shown the ability to boost earnings through a variety of market conditions, creditors need not be concerned that the company will default during a recession.

So if the U.S. cannot pay its creditors, interest rates on U.S. debt would go up, creating a cascade of higher interest rates. So mortgage rates, credit card rates, car loan rates. All would become more expensive. Finally, there is a real concern about the economy — that a default could spark a recession.

In 2011, S&P gave its first-ever credit downgrade to the US, cutting its rating to AA+. More than a decade later, that agency has still not restored its rating. A US default could send shockwaves throughout the global economy and potentially cause a recession, according to experts.

The debt ceiling had been increased multiple times since the 2013 debt ceiling standoff, all without budgetary preconditions attached; the most recent increase was in December 2021.

Germany, Australia, and Canada have consistently received the highest credit rating from Standard & Poor's.

China's economic growth will slow significantly over the next decade. One of the most important drivers of this slowdown is the unwinding of an unprecedented credit bubble. China's financial system simply won't be able to generate the same levels of credit growth that it has in previous years.

The United States is one of the countries with the highest-rated debt in the world, holding a top-ranked AAA from Fitch and Aaa from Moody's.

'aaa' ratings denote the best prospects for ongoing viability and lowest expectation of failure risk. They are assigned only to financial institutions with extremely strong and stable fundamental characteristics, such that they are most unlikely to have to rely on extraordinary support to avoid default.

What are AAA financial ratings? ›

AAA is the highest possible credit rating that may be assigned to an issuer's bonds by any of the major credit-rating agencies: Standard & Poor's (S&P), Fitch, and Moody's. AAA-rated bonds have a high degree of creditworthiness because their issuers can meet financial commitments and are therefore less risky.

An AAA rating is the top assessment of a nation's creditworthiness, signaling that the country has the lowest expectation of defaulting. According to Fitch, an AAA rating is given "only in cases of exceptionally strong capacity for payment of financial commitments."

Abdominal aortic aneurysm risk factors include: Tobacco use. Smoking is the strongest risk factor for aortic aneurysms. Smoking can weaken the walls of blood vessels, including the aorta.

Credit ratings revolve around debt. Thus, debt management is the most important factor in reaching for a AAA rating. Make loan payments on time as often as possible, and always contact lenders to request official extensions if you cannot meet payment deadlines.

What credit score do I need to finance a Tesla? Tesla does not state a minimum credit score for financing. However, as with other brands, you will have much better luck securing a lower APR if you have a better score. Try aiming for a credit score of 720 or higher to get the best possible rate.

The company doesn't list a minimum credit score requirement for a Tesla auto loan or lease. However, borrowers with good or excellent credit have a higher chance of qualifying and getting a lower interest rate.

The upgrade by Moody's comes 17 months after S&P Global Ratings raised Netflix's credit rating to BBB, which is the second lowest investment-grade rating, from BB+, the highest speculative-grade rating. The rating outlook is stable.