Why did the US lose its AAA credit rating? (2024)

Why did the US lose its AAA credit rating?

As of Aug. 1, the U.S. Treasury owed $32.6 trillion, both to bondholders and other parts of the federal government. That's part of the reason that Fitch

cut the U.S. government's long-term creditworthiness by one notch, from AAA – its highest rating – to AA+.

Why was the US credit rating downgraded?

The agency—which lowered the US from the highest AAA classification to the notch lower AA+ rating—said the slight downgrade was due to a “steady deterioration in standards of governance” in recent decades on fiscal and debt matters, among other issues.

Does the US still have a AAA credit rating?

Home / Economy / Articles / What is the US credit rating, and what does its downgrade mean? On August 1, 2023, Fitch Ratings, one of the country's three major credit rating agencies, announced that it had downgraded the US credit rating from AAA to AA+.

Why did Moody's downgrade US Treasury bonds?

Moody's attributed its shift in outlook to declining fiscal stability, as exemplified by the government risking a default on its debt this summer, after Congress failed to raise the debt ceiling.

Did Fitch downgrade the United States long-term ratings to AA +' from AAA '; Outlook stable?

Fitch cut the US sovereign credit grade one level from AAA to AA+. The move comes two months after the rating was placed on “Rating Watch Negative” following the debt-ceiling negotiations. It is expected that US agencies will be downgraded in lockstep with the US government to F-1+/AA+.

When did US lose AAA rating?

In 2011, Standard & Poor's, one of Fitch's competitors, also downgraded its rating for the U.S. from AAA to AA+. S&P similarly blamed governance issues – that downgrade followed a similar debt ceiling standoff – as well as the burden of rising government debt.

When did US credit rating get downgraded?

On August 1, 2023, Fitch Ratings announced its decision to downgrade the US long-term credit ratings to AA+ from AAA, but maintained the country credit ceiling at AAA (meaning other borrowers in the US can still receive AAA ratings). The reaction was swift but varied.

What is China's credit rating?

While it lowered its ratings to negative outlook from "stable", indicating a downgrade is possible over the medium term, Fitch affirmed China's issuer default rating at 'A+', its third-highest category. S&P, the other major global rating agency, also rates China A+, the equivalent of Moody's current A1 rating.

Why did Fitch downgrade US credit?

One reason for Fitch's downgrade was the absence of any political will to deal with the main drivers of the deficit: spending programs for older Americans, including Social Security and Medicare, and repeated cuts to tax rates for most households.

Is AAA better than AA credit rating?

S&P ratings are issued to long-term issuers of credit and insurance companies on a letter-based scale. The first rating is AAA, while the second highest is AA. Anything that falls in the A class is considered high quality, and the debt issuer has a strong likelihood of meeting its financial obligations.

Which country has the best credit rating?

Some of the top examples include Australia, Canada, Denmark, Germany, Sweden, Switzerland, Norway, and Hong Kong. These are all countries that generally carry a credit rating of AAA.

What is Germany's credit rating?

What is France's credit rating?

Do any companies have AAA credit rating?

Just two companies in the S&P 500, Johnson & Johnson JNJ and Microsoft MSFT, maintain their AAA credit ratings from S&P, per an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

What two companies have AAA rating?

Namely Johnson and Johnson and Microsoft. To better understand why only two companies are rated AAA, we must adequately comprehend the prerequisites of getting such a rating.

How many companies in US have AAA credit rating?

Currently there are only two companies in the United States with an AAA credit rating: Microsoft and Johnson & Johnson.

Who owns the majority of the U.S. debt?

The largest holder of U.S. debt is the U.S government. Which agencies own the most Treasury notes, bills, and bonds? Social Security, by a long shot. The U.S. Treasury publishes this information in its monthly Treasury statement.

Why was US credit downgraded in 2011?

S&P controversially downgraded the long-term credit rating from AAA representing a “risk free” rating to AA+ as early as 2011, citing political polarization after another debt ceiling squabble in Washington.

Who owns the national debt?

In December 2021, debt held by the public was estimated at 96.19% of GDP, and approximately 33% of this public debt was owned by foreigners (government and private). The United States has the largest external debt in the world.

What is India's credit rating?

Fitch Ratings affirmed India's credit rating at 'BBB-' with a stable outlook, a report by the ratings agency stated on Tuesday. The rating is supported by a robust medium-term GDP growth forecast and solid external finances, positioning India as one of the fastest-growing nations globally in the coming years.

Who owns most of China's debt?

[2] A report by the credit rating agency S&P Global in 2022 estimated that 79 per cent of corporate debt in China was owed by SOEs (the IMF does not break down the proportion of debt owed by SOEs).

What is the UK credit rating?

What is Canada's credit rating?

What would happen if the US credit rating went down?

If U.S. debt grows and the government struggles to address it, consumers could face higher interest rates for loans since the nation and its borrowers would be deemed less trustworthy, they added. That would mean higher costs for borrowing for everything from credit cards to mortgages to cars.

How much debt is the US in?

The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.