Fitch Holds US At "AAA", But Changes Outlook "Negative"

Fitch held the US rating at AAA, but revised its outlook lower. It is another of the dozens of downgrades that have hit sovereign debt around the world since the beginning of the year. Each has to do with either high debt levels or a sharp drop in GDP. US borrowing costs, however, have remained low and not been hurt by rating agency actions. American debt continues to hold its safe haven status. The 10-Year T-Note now yields only 1.99%.

Fitch wrote:

Fitch Ratings has today affirmed the United States (U.S.) Long-term foreign and local currency Issuer Default Ratings (IDRs) and Fitch-rated U.S. Treasury security ratings at ‘AAA’. Fitch has also simultaneously affirmed the U.S. Country Ceiling at ‘AAA’ and the Short-term foreign currency rating at ‘F1+’. The rating Outlook on the Long-term rating is revised to Negative from Stable.

And

The Negative Outlook reflects Fitch’s declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. ‘AAA’ sovereign rating will be forthcoming following failure of the Congressional Joint Select Committee on Deficit Reduction (JSCDR) to agree at least USD1.2 trillion of measures to cut the federal budget deficit over the next 10 years as mandated under the Budget Control Act passed in August (BCA 2011).

Douglas A. McIntyre