New York: S&P Global Ratings affirmed the US’s sovereign credit score at AA+, the assessor’s second-highest grade, citing the country’s “diversified and resilient economy" while noting the impact of ongoing political wrangling on public finances.
S&P kept a stable outlook on the rating and said in a statement that it expects positive and negative factors to be “balanced" over the next two years. The current ranking already factors in the effect of American political divisions on the government’s ability to address public finance pressures, it said.
“We expect that debates over funding the government and raising the debt ceiling will continue to be resolved at the last minute, as they have been in recent years," S&P said. “We also expect the US’s institutional checks and balances to contribute to stability and predictability in economic policies."
The ratings firm warned that while it assumed measures to address longer-term fiscal challenges will be enacted “over time," a failure to do so could lead to a negative rating action. Conversely, it said the score could be raised if S&P sees “signs of more effective and proactive public policymaking." S&P expects US economic growth of about 3 percent this year and 2.5 percent in 2019.
Treasuries were little changed after the S&P announcement Tuesday, with the 10-year yield holding steady at around 2.88 percent, while the dollar maintained its gains for the day versus major developed market peers.
The US has been rated AA+ since 2011, when S&P stripped the nation of its top AAA rating. The country currently carries top credit scores at both Moody’s Investors Service and Fitch Ratings.