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Apple's debt gets better grade

Standard & Poor's issues an improved debt rating for Apple, based on its improved financial and profitability profile.

Standard & Poor's today issued an improved debt rating for Apple, based on its improved financial and profitability profile.

The improved rating will make it easier for the computer maker to attract investors should it issue more debt. Additionally, the company will be allowed to strike more favorable terms in its debt offerings, such as paying investors at a lower interest rate.

Standard & Poor's raised its senior debt rating of Apple's single-B-plus from a single-B-minus. It also raised Apple's subordinate debt rating to a single-B-minus from triple-C.

The ratings serve not only as an indicator of how likely a company will be able to pay back the principal on an offering, but also the interest for the debt issuance. The triple-A rating is considered the highest rating, while the single-B category is considered a speculative investment, said Martha Toll-Reed, an S&P analyst.

Although Apple was able to improve its credit ratings based on its ability to post a profit for this fiscal year, the revision still reflects concerns over the company's declining market share amid competitive industry conditions, the agency said.

And although Apple has held a strong position in the education and desktop publishing markets, its market presence in the higher-growth corporate and consumer markets is weak and declining, the agency said. Standard & Poor's also noted that Apple's revenue growth and long-term success hinge on its range of new product offerings.

Apple's latest product offerings have spurred the company's comeback efforts. Last summer, it introduced the iMac computer, marking the company's return to the consumer market. Sales of its Power Macintosh G3 systems have also been strong, analysts have noted.