Standard & Poor's gives Google the U.S. debt treatment

Re:Standard & Poor's gives Google the U.S. debt treatment by digikata on Tuesday August 16, 2011 @11:26PM (#2893952)

Why would Google necessarily care about their S&P rating? They have enough cash that they don't have to issue bonds, similarly with equity - I doubt it changes the dilution constraints to issuing new equities much. Short term debt? Nope, that cash again. Financial easing of big purchase deals? What banker is going to pass up working with Google?

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Re:Standard & Poor's gives Google the U.S. debt treatment by MattLaroche on Wednesday August 17, 2011 @12:51AM (#2894150)

This isn't about Google's bond-worthyness or financing corporate debt, but instead about their stock's perceived value. (The article talks about GOOG being rated "buy" versus "sell", not AAA or B which are bond terms.)

S&P ratings do affect how Google will run the business: If Google's stock takes a hit, employees get restless and are more likely to look elsewhere for employment. Employees aren't always long term focused in stock prices. Google could use this as an excuse to buy back their own shares to drive up value.

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Re:Standard & Poor's gives Google the U.S. debt treatment by nl on Wednesday August 17, 2011 @03:14AM (#2894443)

Actually, Google did issue bonds earlier this year[1]. The interest they were paying was so cheap it was better than spending cash. They pay 1.25% for a 3 year bond, up to 3.625% for a 10 year bond.

Theoretically I guess Google could care about their S&P credit rating (as opposed to this stock rating) if it made it harder for them to sell them in the future. Judging from how low the rate they had to pay on those bonds I suspect they wouldn't have any trouble selling them anyway.

Their credit rating is very unlikely to drop while they are highly profitable and sitting on a pile of cash though.

[1] http://www.reuters.com/article/2011/05/20/us-markets-credit-...

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