US Loses Last Perfect Credit Rating Amid Rising Debt

The US has lost its last perfect credit rating, as influential ratings firm Moody's expressed concern over the government's ability to pay back its debt.

In lowering the US rating from 'AAA' to 'Aa1', Moody's noted that successive US administrations had failed to reverse ballooning deficits and interest costs.

A triple-A rating signifies a country's highest possible credit reliability, and indicates it is considered to be in very good financial health with a strong capacity to repay its debts.

Moody's warned in 2023 the US triple-A rating was at risk. Fitch Ratings downgraded the US in 2023 and S&P Global Ratings did so in 2011. Moody's held a perfect credit rating for the US since 1917.

The downgrade "reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," Moody's said in the statement.

In a statement, the White House said it was "focused on fixing Biden's mess", while taking a swipe at Moody's.

"If Moody's had any credibility," White House spokesman Kush Desai said, "they would not have stayed silent as the fiscal disaster of the past four years unfolded."

A lower credit rating means countries are more likely to default on their sovereign debt, and generally face higher borrowing costs.

Source - BBC