Apple’s long-term credit rating has been upgraded to AAA by Moody’s New Technologies

The iPhone maker is now in an exclusive club with Microsoft Corp. and Johnson & Johnson S&P 500 as the only U.S. corporations with the highest credit scores.

Apple Inc.’s Moody’s Investors Service raised its long-term credit rating to Aaa, and put the iPhone maker in an exclusive club with Microsoft Corp. and Johnson & Johnson as the only U.S. corporation in the S&P 500 with the highest credit score. .

“Raising Apple’s rating to Aaa reflects the company’s unparalleled liquidity, strong earnings that we expect will continue to grow over the next 2 or 3 years, and reflects its very strong business profile,” analyst Raj Joshi Moody’s said on Tuesday.

The move raises the market value to one of the world’s largest companies, driven by the success of the iPhone and a boost to lucrative new markets. Apple’s market capitalization flirted with $ 3 trillion this year, and investors bet that expanding it into augmented reality and likely cars could help keep sales growing.

Apple’s financial policy to move to a neutral net position “over time” and its capital allocations since the U.S. tax reform means “it will maintain a very strong liquidity profile for the next 3 to 5 years,” Moody’s said.

After years of raising money from co-founder Steve Jobs for Apple, current CEO Tim Cook has been working on ways to better invest the company’s money and return it to shareholders.

Good quarter

Since 2012, the company has been paying dividends and buying shares. As of October, it had $ 191 billion in cash and marketable securities. In 2018, the company told investors that it is working to make money neutral. Apple had $ 125 billion in debt in October, consisting of floating-rate and fixed-rate banknotes. That leaves its net monetary position at $ 66 billion. It returned $ 24 billion to shareholders in the September quarter, according to the company.

Earlier this year, Apple’s longtime treasurer Gary Wipfler retired. He was replaced by Michael Shapiro, who runs Braeburn Capital’s internal investment firm.

Apple has also used its money in research and development to pre-purchase future components, invest in suppliers, and make purchases like Intel Corp.’s latest $ 1 billion deal for a mobile modem unit.

Companies and analysts expect Apple to be the most profitable quarter so far, with revenue in the first quarter of 2022 likely to be around $ 118 billion, according to Bloomberg forecasts. However, this is not as strong as it could have been, Apple said, with a meager supply of chips at least $ 6 trillion in revenue.

Investors, however, are optimistic about the company’s long-term outlook. Many of Apple’s bonds are trading at a lower yield than U.S. Treasuries on the same maturity, indicating that investors see little credit risk in the company’s debt.

Although the iPhone 13 launched in September was a minor upgrade to the iPhone 12, the company is planning a major overhaul of the iPhone 14 series next year. It also aims to present a major category of its first new products in six years with a mixed reality headset next year.

The new product categories, combined with increased subscription and digital bundle growth, give investors hope to continue to drive revenue from the company’s more than 1.5 billion device base.