Tag Archives: downgrade

Is U.S. Downgradable?

15 Jan

(Reuters) – The United States findexaces a “material risk” of losing its triple-A status if there is a repeat of the wrangling seen in 2011 over raising the country’s self-imposed debt ceiling, credit ratings firm Fitch said on Tuesday. Continue reading

Fiscal Cliff: What Next?

3 Jan

Fiscal-cliffThe U.S. hit its statutorily mandated debt level ($16.4 trillion) three days ago. This means the Treasury Department will use a number of special measures to keep the books open. At most, this will buy a couple months. Talks should begin in earnest around Valentine’s Day. At stake: a possible governmental shutdown. Recall what happened the last time that lawmakers discussed the nation’s debt ceiling: a two-week period in August 2011, in which the nation’s credit rating was downgraded, raising borrowing costs, and the economy almost entered a double-dip recession. President Obama wants Republicans to quickly agree to increase the debt limit, Republicans want to use their acquiescence as a bargaining chip. Moody’s today said it would monitor what happens and didn’t rule out possibly downgrading U.S. debt: “This confluence of events adds uncertainty to the outcome of negotiations.” Prepare for a sequel of August 2011.

Moody’s downgrades European Stability Mechanism to AA1 from AAA, European Financial Stability Facility to AA1 from AAA.

1 Dec

Moody’s Investors Service has downgraded the long-term European Stability Mechanism (ESM) to Aa1 from Aaa and the European Financial Stability Facility (EFSF) to Aa1 from Aaa, Both with negative outlook.According to official press note, “Moody’s decision was driven by the recent downgrade of France to Aa1 from Aaa and the high correlation in credit risk which Moody’s believes is present among the ESFS’ and ESM’s entities’ largest financial supporters.”
As far as France is the second largest contributor to the ESM and the EFSF, “Moody’s view that there is a high correlation in credit risk among the entities’ supporters is consistent with the evolution to date of the euro area debt crisis and the close institutional, economic and financial linkages among the major euro area sovereigns.” Full statement

 

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