S&P reaffirmed its current rating for US sovereign debt, but that was the best news.
- In our view, the credit strengths of the U.S. include its resilient economy, its monetary credibility, and the U.S. dollar’s status as the world’s key reserve currency.
- In our opinion, the U.S.’s credit weaknesses, compared with higher-rated sovereigns, include its fiscal performance, its debt burden, and what we perceive as a recent decline in the effectiveness, stability, and predictability of its policymaking and political institutions, particularly regarding the direction of fiscal policy.
- We are affirming our unsolicited ‘AA+/A-1+’ sovereign credit ratings on the U.S.
- The negative outlook reflects our opinion that U.S. sovereign credit risks, primarily political and fiscal, could build to the point of leading us to lower our ‘AA+’ long-term rating by 2014.
Douglas A. McIntyre
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