The government’s finances have been “substantially worsened by the credit crisis, recession, and government spending to address these shocks,”

Moody’s Reiterates U.S. Spending Risks Credit Rating (Update1)

By Mary Childs

http://www.bloomberg.com/apps/news?pid=20601087&sid=az1YD_O3PXz4

May 25 (Bloomberg) -- The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc.

The U.S. retains its top rating for now because of a “high degree of economic and institutional strength,” the New York- based ratings company said in a statement today that was little changed from a credit opinion released in February. The outlook is stable, the statement said.

The government’s finances have been “substantially worsened by the credit crisis, recession, and government spending to address these shocks,” Moody’s analysts lead by Steven A. Hess wrote. “The ratios of general government debt to GDP and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa-rated countries.”

Debt to revenue has more than doubled over the past three years and is now over 400 percent, which could lead to “potential stress” on finances, the report said.

“This whole financial crisis in Europe has actually benefitted the U.S. government in its access to finance,” Hess said in a telephone interview. “The U.S. Treasury market has become once again, as it was during the recent financial crisis globally, the safe haven, and therefore lots of money flows into the U.S. Treasury market and that is a very positive.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=az1YD_O3PXz4

Moody’s warns US of credit rating fears

Moody’s warns US of credit rating fears
By Michael Mackenzie in New York and Gillian Tett in London

http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html

February 3 2010

Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.

In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

“Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note.

This week, the White House forecast a $1,565bn budget deficit for 2010, which represents 10.6 per cent of gross domestic product and is the highest such ratio of debt to GDP since the second world war.

http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html