JUST IN: Credit rating agency Fitch has downgraded the US rating from its highest AAA rank to AA+
The downgrade comes after lawmakers negotiated up until the last minute on a debt ceiling deal, risking the nation’s first default. Fitch pointed to “the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions” in explaining its downgrade.
“The change by Fitch Ratings announced today is arbitrary and based on outdated data.” The last time US debt was downgraded by another major credit rating agency, S&P, came in 2011 when negotiations on the debt ceiling similarly reached the 11th hour. The move had tremendous market impacts, leading to steep stock market declines and rising bond yields. Markets on Tuesday were unfazed by Fitch’s downgrade in after-hours trading.
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