Moody's Investors Service affirmed all ratings of Wal-Mart Stores, Inc. (NYSE: WMT), including the Aa2 senior unsecured and Prime-1 commercial paper ratings. The stable outlook is continued.

"We view Walmart's announcement today that it is increasing its share repurchase authorization to $20 billion, which is roughly $11 billion in 'new' availability, to be executed over the next two years or so, as within our band of tolerance for the ratings, especially as no new debt is necessary to execute the plan," stated Moody's Vice President Charlie O'Shea. "We have historically factored a reasonable amount of share buybacks into our ratings, and over the past six quarters, Walmart has been well-below that amount as it has put the brakes on repurchases to accommodate its store and online investments, resulting in a reasonable amount of 'catch-up' availability," continued O'Shea. "In addition, the company has deleveraged through both sizeable debt repayments as well as with our recent reduction in lease multiple to 5 times from 8 times, creating additional cushion within our 35% retained cash flow/net debt ratings trigger. Finally, we anticipate cadence for the repurchases to be prudent."

Outlook Actions:

..Issuer: Wal-Mart Stores, Inc.

....Outlook, Remains Stable

Affirmations:

..Issuer: Manhattan Transportation Development Dist KS

....Senior Unsecured Revenue Bonds (Local Currency), Affirmed Aa2

..Issuer: Wal-Mart Stores, Inc.

.... Issuer Rating, Affirmed Aa2

....Senior Unsecured Bank Credit Facility (Local Currency), Affirmed Aa2

....Senior Unsecured Commercial Paper (Local Currency), Affirmed P-1

....Senior Unsecured Regular Bond/Debenture (Local Currency), Affirmed Aa2

....Senior Unsecured Shelf (Local Currency), Affirmed (P)Aa2

RATINGS RATIONALE

Walmart's Aa2 rating continues to consider its position as the world's largest retailer and the myriad competitive advantages this generates, and its superior credit metrics. The rating also considers its growth potential, both in the U.S. via the Supercenter, Neighborhood Market, and other store formats and internationally, though increasing risks are becoming evident in some foreign markets as evidenced by the continuing FCPA investigation, as well as its on-line capability and growth potential.

The rating also considers Walmart's excellent liquidity.

The stable outlook reflects our expectation that Walmart's operating performance will continue to result in a credit profile that, despite share repurchases and growth expenditures, via either organic store expansion or acquisition activity, will remain substantially at present levels. We also believe that in keeping with past practice, in the event of a sizeable acquisition, shareholder returns will be tempered to ensure that the credit profile is not impaired for more than a short time period. At present, there is little upward rating momentum due to the large amounts of cash flow necessary to continue to fund new store and online growth in tandem with the company's historically-material shareholder distributions and potentially increased acquisition activity. Over time, an upgrade would require Walmart to adopt a somewhat less shareholder-oriented financial policy, achieve more consistent operating performance across all product and business segments, and continue its successful transition into a multi-channel retailer, all while maintaining strong credit metrics. Ratings could be downgraded if operating performance or Walmart's competitive edge were to weaken such that credit metrics began to soften, or if the company undertook a large, debt-financed acquisition or very material share buyback. Quantitatively, a downgrade could occur if retained cash flow/net debt were to be sustained much below 35% (LTM July 2015 level stood at 34.7%). In addition, in the event there is substantive negative impact on key management, finances at either the local or corporate level, or growth opportunities emanating from the ongoing investigation into potential violations of the Foreign Corrupt Practices Act in Mexico or any other regulatory issues in other foreign countries, downward pressure could result.