Fitch Affirms US Debt Rating at AAA, Outlook Stable

Finance | August 16, 2011, Tuesday // 18:19|  views

The Obama Administration has regained some ground after Fitch affirmed the highest credit rating for the USA. File photo

Fitch Ratings has affirmed the debt credit rating of the USA at AAA with a stable outlook some 10 days after a fellow agency, Standard & Poor's deprived the US of its top rating mark.

"The affirmation of the US 'AAA' sovereign rating reflects the fact that the key pillars of US's exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base," Fitch said in its Tuesday's statement, adding, "Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks'."

In spite of its affirmation of America's top-notch credit rating status, which comes less than two weeks after Standard & Poor's downgraded the United States' long-term debt to AA+, Fitch did warn that the United States was falling behind its peers among the AAA-rated nations on fiscal matters and that the country is expected to demonstrate results in its efforts to reduce its budget deficit.

Fitch also said it would likely revise its outlook on the U.S. rating to negative from stable if the congressional committee charged with proposing at least USD 1.2 T in deficit reduction fails to reach agreement, or if the economic recovery proves weaker than expected.

"The rating action would most likely be a revision of the rating Outlook to Negative, which would indicate a greater than 50 percent chance of a downgrade over a two-year horizon. Less likely would be a one-notch downgrade," the Fitch statement said.

In early August, another major global credit rating agency, Moody's, reaffirmed the United States' AAA status in early August but announced it was also lowering its outlook on U.S. debt to "negative."

Reaffirmation of the U.S. sterling rating by Fitch and Moody's is widely seen as a reprieve to the Obama Administration which was enraged by Standard & Poor's move on August 5.

Fitch's announcement has been seen to have little immediate effect on the global markets, with analysts pointing out that the differnce in the assessment of the US debt rating between Fitch and S&P's reflects a difference in the level of optimism regarding the measures the US political leadership can agree upon and then implement.

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Tags: Fitch Ratings, Fitch, Moody's, Standard and Poor's, credit rating, credit ratings, debt ratings, USA, US


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