S&P: No Changes to U.S. Credit Rating
Standard & Poor’s said it would keep the U.S. government’s credit rating at AA+ after a congressional committee that was supposed to break partisan gridlock and cut the budget deficit didn’t reach an agreement.
S&P, which stripped the U.S. of its top AAA grade on Aug. 5, said it decided that the supercommittee’s failure didn’t merit another downgrade for the country because the failure will trigger $1.2 trillion in automatic spending cuts. While the firm expects the Budget Control Act to “remain in force,” easing those spending limits may cause “downward pressure on the ratings,” S&P analysts Nikola Swann and John Chambers said today in a statement.
While the S&P announcement is relatively good news, there is much more riding on the opinions of the two other major ratings agencies — Fitch and Moody’s — which did not downgrade the country’s AAA credit rating after this summer’s debt-ceiling negotiations. Fitch said back in August that the supercommittee’s failure would “likely result in negative rating action,” while Moody’s has indicated that the $1.2 trillion sequestration measure in place (at least for now) could be enough to ward off a downgrade, though it did slap a “negative outlook” on U.S. credit following the debt-ceiling talks.