Moody’s reduces the credit rating of America to AA1

Moody’s Moody’s diluted the USA’s credit rating from AAA to AA1, noting that government debt levels and costs for paying the benefits are high.
It is a bad news reduction to US President Donald Trump, coinciding with the stumbling of the Congress on a draft law that combines the extension of its first term and a significant reduction in spending due to the opposition of a number of militant Republicans.

Reasons for reducing classification

In explaining the reasons for reducing the classification, Moody’s referred to “more than a decade in government debt and rates of payment of benefits to much higher levels compared to countries with a similar classification.”
Moody’s decision to reduce the United States classification from the highest level comes against the background of a recent ruling in US borrowing costs, and it is a reflection of similar steps recently taken and the other two main American classification agencies “S & B” and “Fitch”.

Financial deficit

“The successive American administrations and the Congress have failed to reach an agreement on measures to reflect the great annual financial deficit direction,” Moody’s said in a statement explaining the reasons for its decision.
According to the agency’s estimates, the implicit proposals currently will not lead to a reduction in spending and deficit, and expected the deficit to continue during the next decade.
Moody’s warned of a “possible deterioration” of the financial performance of the United States.
The agency has also changed its future outlook from negative to stable, noting that despite the poor record of the United States in addressing the high levels of government debt, the country “maintains exceptional credit powers, similar to the size, flexibility, vitality, and role played by the US dollar as a global reserve currency.”