Moody's might upgrade McDonald's

Moody's Investors Service said it placed the ratings of McDonald's Corp. on review for possible upgrade, including its A3 senior unsecured and Prime-2 short-term commercial paper ratings.

The review reflects McDonald's solid operating performance achieved through strategic initiatives such as new product innovation, cost savings, re-imaging and new restaurant growth, the agency said. These initiatives have helped the company to drive positive same-store sales, strengthen its brand and maintain solid debt protection metrics and liquidity.

The current A3 rating reflects the global strength of the McDonald's brand, its excellent geographic diversity, leading market position, substantial real estate component, strong cash flow and liquidity and a healthy franchise network, Moody's said.

However, the ratings also reflect management's relatively aggressive financial policies toward dividends and share repurchases and the long-term challenge related to significant promotional activity and intense industry competition due to high penetration levels, the agency said.

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