Moody's Downgrades ADP Credit Rating After Company Announces $2 Billion Debt Deal

Moody's Investors Service on Friday downgraded ADP's issuer rating to Aa3 from Aa1, after the company said it is planning a $2 billion debt issuance with the proceeds to be mainly used to buy back additional shares. The move, it's first-ever debt-funded buyback, "represents an abrupt shift away from the company's historically conservative financial practices," Moody's said in a statement. "The significant planned increase in ADP's funded debt signals a meaningful change in financial policy and sets the stage for the possibility of further credit weakening through future debt raises," said the statement. ADP's credit profile had already deteriorated following asset sales, which reduced its scale and decreased the diversification of its product portfolio, said Moody's. ADP shares were slightly lower in premarket trade, but are down more than 6% in the year so far, while the S&P 500 has lost 3.6%.