From ZeroHedge, May 16:
Earlier this week, we noted that short-dated USA sovereign CDS were trading wider than China and Greece as trade policy uncertainty and the debt ceiling 'X-date' loomed...
...well, it appears Moody's Rating Agency noted it too... because they just downgraded the Government of United States of America's (US) long-term issuer and senior unsecured ratings to Aa1 from Aaa and changed the outlook to stable from negative.
The one-notch cut comes more than a year after Moody’s changed its outlook on the US rating to negative, with Moody's joining Fitch Ratings and S&P Global Ratings in grading the world’s biggest economy below the top, triple-A position.
This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.
We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.
Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat.
In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher.
The US' fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns.
The stable outlook reflects balanced risks at Aa1.
The US retains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the US dollar as global reserve currency. In addition, while recent months have been characterized by a degree of policy uncertainty, we expect that the US will continue its long history of very effective monetary policy led by an independent Federal Reserve....
....MUCH MORE
