The Day Has Arrived: S&P Gets Negative on U.S. Triple-A Ratings

If you saw that the equity markets were lower after news out of China this morning, the inevitable credit ratings agency news about the U.S. sovereign debt is adding more fuel to the fire this morning.  Standard & Poor’s has officially lowered the outlook of the United States to NEGATIVE from Stable.  While much of the reasoning was known by anyone with a television and a brokerage account, cutting the official stance for the United States comes with a reaction whether the logic is new or is just a culmination of years and years of telling you what you already know. 

S&P has cited that policy-makers have not agreed to reverse fiscal deterioration on either side yet.  S&P sees the deficit declining slightly but remaining above 6%.  The real risk is that US net debt would reach 84% by the year 2013.

Even though the strengths outweigh some of the economic risks today, S&P said that the outlook for a negative credit rating puts the risk that the “AAA” rating may not be fully supported in the next two years.

If you want to know what the few remaining Triple-A ratings look like, we compiled a full list of which nations still have Triple-A ratings.  In that list we also listed the debt levels, what the outlooks were, added color on each to show the “quality” of Triple-A ratings, and what suppositions would drive the ratings agencies to ultimately drop these Triple-A ratings on each. 

The fears of this day used to be that it was always way out into the future.  It turns out that the future has caught up to us.

JON C. OGG