Two of the “Big Three” Affirm the US Sovereign Credit Rating

In continuing the new approach of providing small updates on the credit rating industry here in financial regulation matters, today’s brief post assesses the recent announcements by both Fitch and S&P regarding the sovereign rating of the United States.


Just before last week’s downgrading of the UK’s credit rating, as we covered here Fitch had, on the 26th March, affirmed the US’ credit rating as AAA, with a stable outlook. Despite warning that the coronavirus pandemic was inflicting an unprecedented shock on the market, Fitch believes that both a. the country is deploying adequate resources (financially, at least) as part of its $2T stimulus package, and that b. as long as the pandemic clears before 2021, the agency expects the drop in GDP to reverse sharply and bounce back. All of the agency’s analysis is caveated by the development and potential continuation of the pandemic, naturally. Yesterday S&P followed suit, affirming the US credit rating as AA+, with a stable outlook. S&P expect continued political disputes to affect the economic progression of the country but, like Fitch, sees the recent stimulus package as positive in terms of dealing with the economic impact of the pandemic. S&P also envisage a strong 2021, pandemic depending. However, both agencies seemingly agree that the debt and fiscal deficits are likely to continue to worsen, as we know they will, but that this will have a negative effect for quite some time moving forward.

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