(Paris) Fitch estimated on Tuesday that the United States no longer deserved their best rating (AAA), becoming the second rating agency to deprive the country of this precious sesame. A decision whose impact for the world’s largest economy remains, for the time being, above all symbolic.
The AAA or triple A corresponds to the best rating assigned by a rating agency to assess the ability of a State, a community or a company to repay its debt.
The three main agencies in the world, S
These assessments are supposed to reflect the economic health: to rate a country, the agencies thus evaluate the growth, the debt, the deficit, the expenses, the tax receipts… in order to establish a diagnosis which will guide the financiers in their investment decisions .
Consequently, the lower the rating, the more investors will be tempted to demand a high interest rate to lend money to a state or a company, because its debt will be considered riskier.
Only a small circle of countries enjoy the highest possible rating from the big three agencies: Australia, Denmark, Germany, the Netherlands, Sweden, Norway, Singapore, Switzerland and Luxembourg.
A few others are rated AAA by only one or two of the three agencies: this is notably the case of the United States with Moody’s which always rates the country triple A, or of Canada and the European Union.
In Europe, several countries, including France, were deprived of the precious sesame with the three main agencies in the aftermath of the 2008 financial crisis.
For France, “it was a leap into the unknown,” Anne-Laure Kiechel told AFP last March. However, after this loss of triple A in 2012-2013, France “did not lose investors” on its debt, assures the founder of the firm Global Sovereign Advisory, specializing in the economic strategy of States.
Nor after Fitch downgraded France from “AA” to “AA-” in April amid protests over pension reform.
Fitch, which has rated the United States since 1994, and Moody’s, since 1949, had never downgraded the American rating before. The United States, on the other hand, has already lost its AAA with the agency S
The loss of triple A is symbolic by the signal it sends to the markets. In fact, the United States maintains a very favorable rating (AA) which will not scare investors away, because American debt remains an essential investment for global savings.
The US 10-year interest rate, the benchmark on the markets, thus crossed the 4% mark for the third time this year just before Fitch’s announcement and has remained there since. But it has been moving close to this symbolic level for months, and its rise is primarily the result of the rise in rates by the American Central Bank (Fed). The dollar for its part was up slightly against the euro on Wednesday, a sign of its status as a safe haven.
Wall Street also showed no major signs of concern: the Dow Jones indices, S
“The U.S. dollar is the world’s most important reserve currency, which gives the government extraordinary funding flexibility,” Fitch said in his conclusions, suggesting that the United States will continue to find buyers for its debt very easily. .
But although the U.S. economy is robust and the unemployment rate is below 4%, “the federal deficit remains on track to reach nearly 6% of GDP for the current fiscal year,” analysts say. from Capital Economics in a note published on Wednesday.
“And interest costs are expected to double from 1.4% of GDP in 2021 to 2.8% in 2025,” they add, calling for watching Fed interest rates which, if they continue to rise too steeply, would risk making the US debt “unsustainable”.
