SEARCH

Entries in Federal Government (1)

Friday
Aug052011

US Expecting Standard & Poor's Debt Rating Downgrade

Scott Eells/Bloomberg via Getty Images(WASHINGTON) -- The federal government is expecting and preparing for bond rating agency Standard & Poor's to downgrade the rating of U.S. debt from its current AAA value, a government official told ABC News.  ABC News called S&P and was told "no comment."

Official reasons given will be the political confusion surrounding the process of raising the debt ceiling and the lack of confidence that the political system will be able to agree to more deficit reduction.

It remains unclear whether the bond rating would drop to AA+ or AA.

Last month, Standard & Poor's warned that the U.S. risked a downgrade to AA status if Congress did not lift the debt ceiling and reduce the total debt by $4 trillion over the next decade. It later toned down its warning.

S&P was the last of the major ratings agencies to comment about U.S. credit rating after the Senate passed an agreement Tuesday to raise the debt ceiling and avoid a default on U.S. debt, following passage in the House on Monday evening.

After the bill passed in the Senate, Moody's Investor Service affirmed its AAA rating on U.S. sovereign debt but lowered its outlook to "negative."

At stake in all this is not only interest rates the U.S. must pay on its $14.4 trillion debt, but a host of rates for consumers ranging from those on items from mortgages to car loans to credit cards.

A downgrade of U.S. debt likely will cause interest rates of all kinds to edge up and that would cost the U.S. and consumers billions of dollars.

Copyright 2011 ABC News Radio







ABC News Radio