Credit rating agency Moody’s Investors Service warned today that it may downgrade the U.S. credit rating from Aaa to Aa1, if negotiations on the budget for 2013 will not lead to a drop of the public debt / GDP ratio, according to AFP.
“If these negotiations will lead to concrete policies to stabilize and subsequently cause a decrease in the debt / GDP ratio over the medium term, it is possible for the rating to be confirmed, and the perspective to return to stable” informs Moody’s. “But if negotiations will not give rise to such policies, Moody’s expects to downgrade the U.S. credit rating, most likely to Aa1”, the agency added.
Moody’s noted that it is difficult to predict when the negotiations will be completed, but that the current rating of Aaa assigned to the U.S. with a negative outlook, will be maintained until the outcome of these negotiations will be clear.
A year ago, the Standard & Poor’s rating agency downgraded the long-term credit rating for the U.S. by a notch from “AAA”, maximum possible to “AA +”. The agency removed therefore the U.S. from the list of countries considered the safest for borrowing money. Shortly after the announcement of S & P, White House administration reacted with indignation, noting that the analysis that led to the decision contained an error of about $2 trillion ($2,000 billion).
To avoid the downgrade, the U.S. should have not only increased the debt ceiling, but also developed a credible plan to counter the country’s long-term debt. Representatives of S & P said in August 2011 that the decision was taken because things were moving too slowly to increase the debt ceiling and the political struggle was too significant.
Last summer, the other two rating agencies, Fitch and Moody’s, have announced that they didn’t have immediate plans to follow S & P decision.
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