FORTUNE — Amazon’s recent $2.5 billion bond offering, if it were listed on the popular retailer’s website, would get two very different and confusing reviews: One for nearly five stars; the other for just over one.
Days before the online retailer’s late November debt deal, ratings agency Standard & Poor’s issued its report on the soon-to-be sold bond. S&P gave Amazon’s debt an AA-. That’s not much different a rating than that of the U.S. government, which, despite the country’s recent fiscal problems, is still considered sterling credit and gets an AA+. “We think Amazon has a very low probability of default,” says David Kuntz, S&P’s analyst who rated the bond.
On the same day, Moody’s came out with its rating for Amazon’s debt: Nearly junk. The actual rating was Baa1, which is the equivalent of BBB+ and only two steps up from the demarcation line between what is considered a safe investment and what’s not.
While the ratings agencies do sometimes give different ratings to the same bond deal, it’s very rare for them to diverge as widely as they have on Amazon. David Novosel, a senior analyst at independent bond research house Gimme Credit, says a four notch difference, which is the spread between S&P’s rating and Moody’s, is “almost unheard of.”
Another way to think about it is the different between China and Italy. China, which is growing its GDP at more than 7%, gets an AA- rating from S&P. Italy, on the other hand, was seen last year to be on the verge of a sovereign debt crisis. It gets a rating of BBB+.
About a year ago, S&P’s former chief credit officer Mark Adelson, who left the agency in August after pushing for stricter ratings criteria, says he went through the ratings of the 125 companies in the CDX North American Investment Grade index. He says he found little difference between S&P and Moody’s on any of the companies. “Splits happen,” says Adelson. “But a four notch difference is quite big.”
Even stranger is that the split is on Amazon, a company that has relatively little debt and is these days beloved by stock investors. Shares of Amazon (AMZN) are up more than 45% this year to a recent $253.
Moody’s (MCO), the more bearish of the two, focused on the fact that Amazon recently reported its lowest level of profits in six years. The analysts said profit margins were likely to stay down, due to rising competition and increased shipping costs. In addition, Moody’s analysts said they thought the company’s push into devices and other online services will require more capital spending, which would also drag down profits.
S&P, on the other hand, said Amazon was dominating online, and would continue to do so. Even with the addition of sales taxes, which have not been charged online in many states, S&P’s Kuntz said he thought the company’s revenue could continue to grow more than 30% a year for the next few years. Despite its profit problems, Kuntz thought Amazon had about double the amount of cash on hand than it needed to make its interest payments.
Kuntz declined to comment on Moody’s rating. Moody’s didn’t return calls for comment on its bond rating for Amazon or why it differed from S&P’s.
Adelson says the different rating is not likely the result of a conflict of interest or some other behind the scenes deal. Amazon probably paid Moody’s and S&P the same fee to rate its bonds. And Amazon is not a big issuer of debt so there was no real reason for either company to try to woo Amazon to use it again.
In fact, Adelson says the difference of opinion is a good sign. During the financial crisis, the ratings agencies were often criticized as being rubber stamps for Wall Street, giving top ratings to tens of billions in mortgage deals that eventually had to be downgraded. The Securities and Exchange Commission is reportedly still examining the process by which the agencies rated mortgage bonds at the height of the housing bubble.
So who’s right on Amazon bonds? S&P or Moody’s? Potentially neither. Amazon’s 10-year bonds, which were offered with a yield of 2.5%, now have a yield of 2.64%, which means they have lost value. Nonetheless, Gimme Credit’s Novosel says if the market really viewed the bonds as BBB+, the yield would have dropped to 3%. But they’re not quite a AA-, either. Bonds with that rating tend to trade for a yield of 2.3%. So Amazon probably should have a rating somewhere between the ratings of S&P and Moody’s, which is probably how the system is supposed to work.