June 13, 2016 / 7:50 PM / a year ago

Moody's reviews Microsoft credit rating for cut after LinkedIn deal

(Reuters) - Rating agency Moody’s placed Microsoft Corp’s (MSFT.O) ‘AAA’ credit rating under review for downgrade following the software giant’s deal to buy LinkedIn Corp LNKD.N 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 amortization) 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 LinkedIn adds 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 (JNJ.N) and Exxon Mobil Corp (XOM.N) as the only U.S. companies retaining triple-A ratings from Moody‘s. Exxon recently lost its triple-A from Standard & Poor‘s.

Reporting by Sai Sachin R and Narottam Medhora in Bengaluru; Editing by Shounak Dasgupta

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