The United States Loses Top Credit Rating from Three Major Credit Rating Agencies; Moody's Downgrades US Sovereign Credit Rating to Aa1

BlockBeats News, May 18th. On May 16th, Moody's downgraded the United States' sovereign credit rating from Aaa to Aa1, with a "stable" outlook. The downgrade was due to the continuous increase in government debt and interest payment ratio, with the fiscal deficit expected to approach 9% of the GDP by 2035. This is Moody's first downgrade of the United States since 1917, causing the U.S. to lose all AAA top ratings from the three major credit rating agencies.

Moody's had previously changed the U.S. credit rating outlook from "stable" to "negative" in November 2023 but maintained the Aaa rating. Reasons included increasing debt burden, rising interest costs, and a lack of effective control over the fiscal deficit.

In 2011, S&P downgraded the U.S. rating from AAA to AA+, with no further changes since then. In the past two years, S&P has maintained a AA+ rating for the United States with a "stable" outlook. S&P's reasons for the 2011 downgrade included political gridlock and fiscal deficit issues, with recent comments indicating continued monitoring of debt growth and political divisions.

In May 24th, 2023, Fitch placed the U.S. AAA rating on "negative watch," warning that the debt ceiling crisis could lead to default risk. Then, on August 1st, 2023, Fitch downgraded the U.S. rating from AAA to AA+, with a "stable" outlook. The reasons for the downgrade were the expected deterioration of the fiscal situation over the next three years, high debt burden (debt/GDP expected to reach 118.4% by 2025), and erosion of governance capacity (debt ceiling deadlock recurrence). In recent years, Fitch has not made further rating adjustments, maintaining AA+ with a "stable" outlook.