Blockchain and Financial Services Blog

United States' Credit Rating Downgraded By Standard & Poor's

On Friday, August 5, 2011, Standard & Poor’s credit rating agency downgraded the United States’ credit rating from the highest rating of AAA to AA+.  The agency lowered the rating the same week lawmakers in Washington, D.C. voted to increase the United States’ debt limit.  Standard &Poor’s is one of the three main credit rating agencies.  The other two are Moody’s Investors Services and Fitch. 

The credit rating drop was the first since the United States received the highest rating in 1917.  Credit ratings are used to determine the ability of a nation (or corporation) to repay its debt as issued in the form of bonds.

The downgrading of the credit rating may make future borrowing more costly.  Bonds that are perceived to be more risky attract purchasers through offering higher interest rates.  The higher interest rates the United States may be forced to offer may, in turn, force interest rates within the United States higher.  That could result in higher rates for everything from credit cards to home and business loans. 

Post a comment:

*All fields are required.

Ask the Blogger

Do you have a topic that you would like discussed in a future blog article? Please let us know. If you have a confidential question regarding a blog article, please feel free to contact the article's author directly, or let us know if you would like for someone to contact you directly.

Attorney Spotlight

Vincent E. Mauer represents clients in commercial and business disputes with particular emphasis on financial institutions and instruments, including financial institution bonds, securities, insurance policies and commercial loans.