By Michael Calia
Moody's Investors Service on Monday lowered its outlook for
Amazon.com Inc.'s credit rating to negative from stable after the
online retailer said it would issue a "substantial" level of new
senior unsecured notes.
Moody's, however, affirmed Amazon's medium investment-grade Baa1
rating, as the company's "excellent liquidity provides sufficient
cushion," the credit ratings firm said.
Shares of Amazon fell nearly 3% in early trading Monday.
Moody's said it took into consideration Amazon's dominant
position in the online retail space, but said that the company
faces growing competition from traditional retailers who work to
broaden their online businesses.
The firm also said it is unlikely that Amazon's rating would
move up in the near- to midterm as the company's expense levels are
"likely inflated as a result of significant investments in both
technology and SG&A," weakening its ability to cover interest
on debt.
Moody's said that the new debt will further exacerbate the
interest-coverage concerns.
Moody's action follows Standard & Poor's Ratings Services'
decision earlier Monday to affirm its stable outlook and high-grade
double-a-minus corporate credit rating on Amazon.
Write to Michael Calia at michael.calia@wsj.com
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