Siemens 2007 Annual Report Download - page 276

276 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
On November 9, 2007 Moody’s Investors Service downgraded Siemens’ long-
term corporate credit rating from Aa3 to A1 and set its outlook from “negative” to
“stable”. The rating action followed the announcements of a share-buyback pro-
gram of up €10 billion (see also Note 42, Subsequent events) and a capital structure
target. The rating classifi cation of A1 is the third highest rating within the agen-
cy’s debt ratings category. The numerical modifi er 1 indicates that our long-term
debt ranks in the higher end of the A category. The Moody’s rating outlook is an
opinion regarding the likely direction of an issuer’s rating over the medium-term.
Rating outlooks fall into the following six categories: positive, negative, stable,
developing, ratings under review and no outlook.
Moody’s Investors Service’s rating for Siemens’ short-term corporate credit and
commercial paper is P-1, the highest available rating in the prime rating system,
which assesses issuers’ ability to honor senior fi nancial obligations and contracts.
It applies to senior unsecured obligations with an original maturity of less than
one year.
In addition, Moody’s Investors Service published a credit opinion. The most
recent credit opinion for Siemens as of November 13, 2007 classifi ed the liquidity
profi le of the Company as “very healthy”.
Standard & Poor’s rates Siemens’ long-term corporate credit AA–. On June 15,
2007 Standard & Poor’s resolved the “CreditWatch negative”, dated April 26, 2007
and kept a “negative” outlook. Within Standard & Poor’s long-term issue and
issuer credit ratings, an obligation rated AA has the second highest rating cate-
gory assigned. The modifi er “–” indicates that Siemens’ long-term debt ranks in
the lower end of the AA category. The Standard & Poor’s rating outlook is an opin-
ion regarding the likely direction of an issuer’s rating over the medium-term. Rat-
ing outlooks fall into the following four categories: Positive, Negative, Stable and
Developing. Outlooks have a time frame of typically two years. Ratings appear on
CreditWatch when an event or deviation from an expected trend has occurred or is
expected, and additional information is necessary to take a rating action. A rating
review will normally be completed within approximately 90 days, unless the out-
come of a specifi c event is pending.
Siemens’ short-term debt and commercial paper is rated A-1+ within Standard
& Poor’s short-term issue credit ratings, giving Siemens the highest-ranking
short-term rating.