Moody's Puts AT&T on Downgrade Review

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Credit ratings agency Moody's (NYSE: MCO  ) has announced it may downgrade its rating for AT&T (NYSE: T  ) in light of recent changes to the telecom's financial policy. Approximately $64 billion in debt is affected, according to Moody's.

Moody's said AT&T's intent to increase its debt in order to make good on its stock repurchasing plan and to increase capital expenditures has prompted a review of AT&T's commercial paper rating of A2.

AT&T has a current 1.5 times adjusted debt/EBITDA ratio, which will increase to 2.5 times, according to Moody's calculations. This is a "strong negative" says Moody's and will put "many of AT&T's financial metrics ... outside the boundaries expected for an A2-rated issuer for an extended period ..." The agency considers 2.0 times adjusted debt/EBITDA a potential downgrade benchmark.

Moody's says it wants to review all AT&T ratings, including its short-term debt rating, while it assesses "the offsetting positives that may derive from increased capital spending in the wireless and wireline businesses." The ratings agency noted that it views favorably AT&T's plans to increase capital spending on wireless, as "it should improve AT&T's service quality and help the company maintain its position as a leader in the US wireless industry."

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2104589, ~/Articles/ArticleHandler.aspx, 10/22/2016 5:55:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 20 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
T $37.49 Down -1.16 -3.00%
AT and T CAPS Rating: ****
MCO $102.24 Down -5.85 -5.41%
Moody's CAPS Rating: ****