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Moody’s: U.S. still as sound as AAA-rated countries

By Agence France-Presse
Monday, August 8, 2011 22:38 EDT
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NEW YORK — The United States remains on a fiscal footing that is as solid as other AAA-rated countries, the Moody’s ratings agency said Monday, in a retort to last week’s downgrade by its rival Standard & Poor’s.

“Relative to other large AAA-rated governments, the US debt position is somewhat high, but not out of line with the positions of these countries,” Moody’s said in an analyst note.

The United States benefits from strong long-term growth potential and the dollar’s unique status as a global reserve currency, which lets Washington maintain higher levels of debt than it could otherwise, Moody’s said.

Moody’s also presented a more hopeful perspective than S&P on last week’s debt-reduction deal, which will cut more than $2 trillion from US government spending over the next decade.

“Although the political process has been considerably more contentious than usual in the past few months, it finally did produce an agreement,” Moody’s said.

“We expect further fiscal measures over time, albeit with vigorous debate over the particulars.”

Moody’s did warn that its AAA rating for the United States would be at risk of a downgrade if the government weakened its commitment to fiscal discipline or if a significant economic deterioration undermined its finances.

S&P stunned the world on Friday by cutting the US long-term sovereign debt rating from AAA to AA+ for the first time in history.

Unlike S&P, Moody’s has kept its top-notch rating for the United States, though it attached a “negative” outlook to its rating last week after Congress passed its last-minute deal to cut spending and raise the debt ceiling.

The United States came to the brink of default as Democrats and Republicans remained deadlocked on raising the government’s borrowing limit amid deep disagreements over tax increases and spending cuts.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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