Rating agency Moody’s placed Microsoft Corp’s ‘AAA’ credit rating under review for downgrade following the software giant’s deal to buy LinkedIn Corp for $26.2 billion, citing concerns that it would be funded through new debt.
Funding the deal entirely with debt will increase Microsoft‘s gross debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio, that could pressure its credit rating,Moody’s said in a statement on Monday.
Microsoft, which will buy LinkedIn in its biggest-ever deal, said it would issue new debt to fund the acquisition.
Separately, Standard & Poor’s affirmed its ‘AAA’ credit rating and stable outlook on Microsoft.
“Our rating affirmation on Microsoft reflects our view that the company’s acquisition of LinkedInadds to its diversified product portfolio,” S&P Global Ratings credit analyst David Tsui said.
The potential Moody’s ratings cut on Microsoft will leave Johnson & Johnson and Exxon Mobil Corp as the only U.S. companies retaining triple-A ratings from Moody’s. Exxon recently lost its triple-A from Standard & Poor’s.