S&P Downgrade of U.S. Credit Rating

On August 5, S&P downgraded the sovereign credit rating of the United States to ‘AA+‘ from ‘AAA’, and stated that the outlook on the long-term rating is negative. S&P cited the prolonged controversy between Congress and the Obama Administration over raising the statutory debt limit, and the rising public debt burden as reasons for the downgrade. S&P also published a list of ratings actions on Organizations, Issues (including U.S. Public Finance), Insured Bonds, and Funds that were affected by the rating downgrade. S&P Release on Downgrade. S&P Rating Action Related Information.

On August 5, the Fed, FDIC, NCUA, and OCC announced that, for risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government-sponsored entities will not change as a result of the downgrade by S&P. Agencies’ Joint Release.

On August 2, Moody’s confirmed the ‘Aaa‘ government bond rating of the United States following the raising of the statutory debt limit while assigning the rating a negative outlook. Also on August 2, Fitch confirmed its ‘AAA‘ United States sovereign rating but noted that it projects that the United States government debt will continue to rise over the medium term in a manner inconsistent with maintaining a ‘AAA’ rating. Moody’s Release. Fitch Release.

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