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Sat, 09/28/2024 - 11:37
Submitted by maithuy on Wed, 08/17/2011 - 09:31
Fitch Ratings on August 16 reaffirmed the US’s AAA credit rating.

The move comes less than two weeks after Standard & Poor's downgraded the US long-term debt to AA+.

"The key pillars of US's exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base. Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks,' " Fitch said in a statement.

Fitch did add a caveat, however. It would likely revise its outlook on the US rating to negative from stable if the congressional committee charged with proposing at least US$1.2 trillion in deficit reduction fails to reach agreement, or if the economic recovery proves weaker than expected. That means there would be a greater than 50% chance that Fitch would downgrade the country within two years.

Still, that's more lenient than Moody's, which reaffirmed the US’s AAA status in early August but announced it was also lowering its outlook on US.debt to "negative."

Moody's left open the possibility that it might downgrade the US if the recent debt ceiling deal fails to achieve the deficit reduction promised, if the economic outlook deteriorates significantly or if interest rates spike and increase the government's borrowing costs.

Reaffirmation of the US sterling rating by Fitch and Moody's is no doubt some comfort to the Obama administration, which expressed anger and frustration when Standard & Poor's on August 5 downgraded the US, citing the "political brinksmanship" in the debt-ceiling debate as indication that governance in Washington has become "less stable, less effective, and less predictable."

CNN/VOVNews

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