Triple A

(By Richard Holway – Sunday 22nd Feb 09 6.00pm) My eye was attracted to Triple AAAAAAAA in Saturday’s FT Lex column. Back in 1980 there were 60 non financial Triple A rated stocks in the US – now there are just six. But what really caught my eye was that two of these (or a third of all Triple A rated companies if you wanted to make a headline) are tech companies. One is Microsoft and the other is Automatic Data Processing (ADP). Whatever doubts I might have about Microsoft, they don’t include the likelihood of Microsoft defaulting on its debt (particularly given their $18.7 billion cash balance. See my 26th Jan 09 post – CASH).

Some may question the inclusion of ADP as a ‘tech’ company. But we have included IT-oriented BPO players in our analysis since we started in 1986. Indeed, I well remember in early 1999 when the FTSE introduced their IT index (it was the precursor to TechMark). When I scanned the constituents I noted that Capita was not included and called Paul Pindar to point out the ‘mistake’. Paul was adamant that he didn’t want to be thought of a tech company and, in an echo of the famous Groucho Marx quote, said “Richard, I wouldn’t want to belong to any index that had Misys as a constituent.” Capita has never been in TechMark either – but has, despite Pindar’s protestations, always been a Boring Triple A constituent of our research.