Moody's said the review for downgrade was prompted by McDonald's announcement that it will accelerate its 3-year shareholder target and return $8 billion to $9 billion to shareholders in 2015 through dividends and buybacks.
"Overall, Moody's views this accelerated share repurchase and guidance to the high end of the payout range during a period of continuing operating weakness as McDonald's adopting a more aggressive financial policy towards shareholders that will result in significantly higher debt levels, weaker credit metrics and limit its financial flexibility," Moody's Senior Credit Officer Bill Fahy said.
Moody's added that McDonald's ability to strengthen its credit metrics could be difficult if the company's turnaround plans and restructuring don't reach its expectations.
TheStreet Ratings team rates MCDONALD'S CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MCDONALD'S CORP (MCD) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."