Nonfinancial Firms Slip in 'AAA' Ratings

Only six non-financial firms in America have triple-A ratings, down from 12 in 2002 and 25 in 1992, according to a report by Standard and Poor's Global Fixed Income Research. These include United Parcel Service and Pfizer, which are on CreditWatch Negative and have a negative outlook, respectively. Exxon Mobil Corp., Automatic Data Processing Inc., General Electric Co., and Johnson & Johnson round out the six.

The reason many American companies have seen their ratings downgraded is due to changes in the companies' strategies, with firms more focused on shareholder return and contending with increased foreign competition. As a result, many are taking on more debt and raising their risk profile. In fact, five out of the six triple-A rated companies have debt.

These ratings downgrades have not been overwhelmingly costly for the companies, according to the report. The average difference in yield on 10-year corporate bonds rated double-A versus triple-A has been 13 basis points since 1996, while single-A rated bonds have demanded a 24 basis point premium over triple-A bonds.