: Investors seeking triple-A rated U.S. corporate debt only have these two choices — for now

by | Nov 14, 2023 | Stock Market

Moody’s Investors Service has put the U.S. on alert that it may downgrade its triple-A sovereign rating, amid higher interest rates and doubts about the government’s ability to implement effective fiscal policies. The rating agency revised its outlook on the rating to negative from stable on Friday, meaning it may downgrade it in the future. Moody’s is the only one of the three major agencies to still hold a triple-A rating on the U.S.; both S&P Global Ratings and Fitch already downgraded it to AA+.

While at least 10 other countries continue to enjoy triple-A ratings, investors interested in holding some AAA-rated U.S. debt have two options — pharmaceutical and medical technology giant Johnson & Johnson
or software behemoth Microsoft Corp.
Microsoft has about $51 billion of outstanding bonds and about $144 billion of liquidity, according to FactSet data. J&J has about $29.5 billion in bonds and $33.5 billion of liquidity. As the following charts from data solutions provider BondCliQ Media Services show, both companies took advantage of the zero-interest rate backdrop before and during the pandemic years to push out maturities. The 30-year maturity bucket is the biggest for both issuers.

Outstanding bonds of Johnson & Johnson and Microsoft by maturity bucket. Source: BondCliQ Media Services

As the following charts show, over the past two weeks, there have been net sellers of Microsoft bonds, but net buyers of J&J bonds.

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