Downgrade! Only 3 U.S. companies now rated AAA

Blue-chip company Automatic Data Processing was stripped of its pristine credit rating, a dramatic move that leaves just three U.S. companies holding the coveted AAA rating.

Only three companies, consumer products firm Johnson & Johnson, energy giant Exxon-Mobil and technology firm Microsoft still have the coveted AAA rating from S&P. The top AAA rating is reserved for those companies with the utmost financial strength and discipline in meeting all obligations.

Following its decision to spin-off its stable auto-dealers services unit, Standard & Poor's Thursday downgraded payroll processor ADP two notches to AA. The downgrade of ADP is a shock to investors since the 65-year-old company has been one of the few companies to hold the top debt rating for years. ADP was upgraded from AA to AAA in October 1998, S&P says. Shares of ADP Friday fell $1.49, or 2.0%, to $73.73.

S&P dealt harshly with ADP, saying the company plans to use $700 million or more from the spin-off of its auto-dealers services unit to buy back shares of stock. Shares of ADP fell $1.43, or 1.9%, to $73.79.

The number of companies with the top-credit rating has been dwindling for years. Back in 1980, there were more than 60 U.S. companies rated AAA by S&P. That fell to six in 2008. Since then, industrial company General Electric, drugmaker Pfizer and now ADP have been downgraded.

Some companies find ways to pull themselves back into the top credit level. Food company Kellogg, was downgraded to AA+ on Dec. 12, 1984, but managed to work its way back to AAA by July 15, 1987, S&P says.

But other times, losing the AAA rating is the beginning sign of more serious woes. Automakers Ford Motor was rated AAA in 1970 and General Motors had the top rating in 1953, S&P says. Both, though, saw their bonds fall to junk status in 2005 and the companies faced significant financial challenges since then.


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