Moody's rates Apple notes Aa1

Moody's Investors Service said it assigned an Aa1 rating to Apple Inc.'s senior note issuance. The outlook is stable.

Proceeds will be used to bolster the company's U.S. cash balances and aid in the $130 billion shareholder return program.

The agency said the Aa1 rating reflects Apple's position as one the world's leading providers of mobile communications devices, tablets, personal computers, portable media players and digital content. Apple has a very robust financial profile with operating margins, coverage and cash flow metrics that compare favorably with companies that also have very high debt ratings, Moody's said.

On the other hand, Moody's recognizes that competition from other handset manufacturers and strains in telecom distribution will weigh on iPhone pricing and margins.

Additionally, the company just increased its stock buyback authorization by an incremental $30 billion through the end of 2015. Based on estimates of the decline in the company's domestic cash, Moody's estimated that Apple could borrow an incremental $25 billion to fund the share purchases, and the agency said the ratings could be pressured if debt going forward is increased meaningfully more than the $25 billion now expected.

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