From S&P:

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.

If the U.S. government isn’t AAA, then government-backed securities aren’t AAA, either. There’s a lot of them.

To begin with, there’s a $5 trillion market in “agency” mortgage securities, meaning Fannie/Freddie products.

Add to that  Ginnie Mae securities and more than $1 trillion in student-loan debt, which is securitized and sold.

Beyond this, as I wrote a week or so ago: “The ten major holders of U.S. Treasury debt are, in order: 1. the Fed, which has more than doubled its holdings of U.S. sovereign debt in the past few years; 2. individual investors, mostly in the United States; 3. the Chinese; 4. the Japanese; 5. pension funds; 6. mutual funds; 7. state and local governments; 8. the Brits; 9. the banks; and 10. insurance companies.” All are likely to experience some turbulence, though not necessarily downgrades.