The debt rating service says that bond holders have no need to fear the fallout from a parliamentary report yesterday that says Rupert Murdoch’s handling of the UK hacking scandal made him “not a fit person to exercise the stewardship of a major international company.” The media and entertainment giant’s “significant cash balance and strong free cash flow generation mitigates the uncertainty of additional financial fallout from the phone hacking scandal,” Moody’s Investors Service concluded today. News Corp has a strong Baa1 senior unsecured rating; it generates about $2.5B a year in cash and had $9.4B in its coffers at the end of 2011, equal to more than 60% of its $15.5B in debt. Moody’s says that after “cutting through the highly politicized hyperbole” it concluded that News Corp can “mitigate potential costs” from the scandal. The report  from the Culture, Media and Sport Committee “represents an opinion without any direct regulatory implications.”

Of course it “could have a bearing” on communications regulatory agency Ofcom’s feeling about whether to make Murdoch divest some or all of his 39% stake in BSkyB. But that’s not a big deal: “BSkyB is not consolidated into News Corp’s financials” so a sale “would not impact the company’s financial metrics.” Indeed, if Murdoch had to sell, then his company would “receive significant after-tax cash proceeds from the sale” — especially if News Corp could relinquish its BSkyB board seats to buy time and avoid a fire sale. While Moody’s doesn’t fear the scandal, it is concerned that News Corp might use some of its cash to please stockholders, for example by repurchasing more of its shares or issuing a fat dividend. If that happened, then “the company’s credit rating could come under pressure.”