Thursday, June 1, 2023

Vogon Today

Selected News from the Galaxy

Fitch wants to review the US credit rating. The debt ceiling strikes again

The debt ceiling strikes again. Rating agency Fitch has taken a negative stance on the US's “AAA” credit rating, placing it on watch, due to ongoing discussions on the country's debt ceiling.

The agency particularly highlighted the growing political partisanship that is hampering progress towards a resolution to raise or suspend the debt limit, despite an impending end date. Fitch stressed that the failure to reach an agreement before the latest expiration date identified by the Treasury

it would send a negative signal about overall governance and the willingness of the United States to timely fulfill its obligations, which would be incompatible with maintaining the "AAA" rating.

Standard & Poor's rating for the United States is AA+ with stable outlook. Moody's credit rating for the United States was last set at Aaa with a stable outlook. DBRS rating for the US is AAA with stable outlook.

In general, the rating is used by sovereign wealth funds, pension funds and other investors to assess the creditworthiness of the United States, with a major impact on the country's funding costs. This page contains the US government debt rating as reported by the major rating agencies.

The effects of this political situation on the CDS, ie on government bond insurance , are evident, with the cost of this security at its highest since 2009 for US government bonds.

But what is the situation from a political point of view? The standoff may be nearing an end with both sides, House Speaker McCarthy and the White House, resuming talks today. The White House does not accept having its programs influenced by the Chamber, and the deputies do not accept not having a say in the definition of the budget. All this causes a stalemate that each side is unloading on the other, with the risk of heavy repercussions on the reliability of US finance. A danger that will probably come to put a bit of haste on both sides.

Thanks to our Telegram channel you can stay updated on the publication of new articles from Economic Scenarios.

⇒ Register now


The article Fitch wants to review the US credit rating. The Debt Ceiling Strikes Again comes from Scenarios Economics .

This is a machine translation of a post published on Scenari Economici at the URL on Thu, 25 May 2023 09:37:19 +0000.