US losing AAA credit rating


Anjali Sharma

GG News Bureau

NEW YORK, 12th Nov. Moody’s on Saturday said that the US is losing its last perfect credit rating after Moody’s Investors Service changed the outlook of the nation’s debt to negative.

The move does not automatically mean it will downgrade the country’s creditworthiness, it increases the chances, media reported.

News reports indicated that the prospect of a US downgrade could hurt Americans’ investment portfolios, make it even more expensive for them to borrow money, and make it more costly for the government to pay off its debts.

These effects would likely be even more painful if Moody’s does eventually downgrade the US debt.

The nation’s diminished fiscal strength, undone by extreme partisanship in Washington, was a key driver of the action, according to a statement from Moody’s.

The statement said ”In the context of higher interest rates without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”

US government officials pushed back on the move and cited the liquidity of US Treasuries, among other factors.

Deputy Secretary of the Treasury Wally Adeyemo said in a statement “We disagree with the shift to a negative outlook,”.

“The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”

Moody’s is the only one of the three major credit rating agencies to assign the United States an outstanding rating of AAA, which it has maintained since 1917.

Standard and Poor downgraded the US for the first time in 2011, after the debt ceiling standoff .

Fitch Ratings knocked America’s credit rating down after the most recent debt ceiling debate in August.

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