UPDATE: 2nd Credit Rating Agency Downgrades U.S.

Independent credit rating agency Egan-Jones downgraded the credit of the United States on July 18, 2011.

From Reuters:

July 18, 2011
Credit rating agency Egan-Jones has cut the United States’ top credit ranking, citing concerns over the country’s high debt load and the difficulty the government faces in significantly reducing spending.

The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.

Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.

Read the rest of this article HERE

From Bloomberg:

July 18, 2011
Egan-Jones Ratings Co. cut its rating on the U.S. by one step to AA+ from AAA, citing the high level of debt outstanding relative to other countries and concern that politicians may fail to reduce spending.

“The major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending,” the firm said July 16 in a report. Egan-Jones placed the U.S. on negative watch on March 1.

Read the rest of this article HERE

Today, Jake Tapper of ABC News reports the following on his ABC News BLOG:

A government official tells ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value.

Official reasons given, he official says, will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited.

The official was unsure if the bond rating would be AA+ or AA.

Another government official confirms the Obama administration is preparing for the downgrade but is not 100% positive it’s going to happen, and if it does happen officials are not sure when it will happen.

Before ratings agencies issue a downgrade, there is often some back and forth that goes on behind the scenes. Treasury Department officials have been making the case for months that S&P should not downgrade US debt.

Tuesday, August 2, 2011 a Chinese credit ratings agency also downgraded the rating of the United States.

AP:

BEIJING (AP) — A little-known Chinese ratings agency has downgraded the rating of the United States from A+ to A. The move is unlikely to affect U.S. borrowing rates but reflects the pessimism Washington’s debt battle has generated worldwide.

President Barack Obama signed emergency legislation to boost the debt ceiling ahead of a deadline to avoid an unprecedented national default.

Still, China’s Dagong Global Credit Rating Co. said Wednesday that the deal doesn’t change the fact that U.S. debt growth has outpaced its economy and fiscal revenue.

Dagong is little-known outside China but hopes to compete with global ratings agencies Moody’s, Standard & Poor’s and Fitch.

Moody’s has said the U.S. will retain its highest bond rating but with a “negative” outlook.

You can find this article HERE

***UPDATE***
10:30PM CST
Standard &Poor’s (S&P) has downgraded the credit rating of the United States for the 1st time in American History. The rating was lowered one notch below AAA to AA+.

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About Shelly Dankert

Unrepentant Conservative blogger.
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