Wednesday, July 20, 2011

The US's Implied Credit Rating is a Two Step Downgrade



The current implied credit rating for the U.S. is 2.7, compared to 2.2 back in March, equivalent to approximate ly ‘AA’ on S&P’s scale. That is two levels below the U.S.’s current rating. March was the last time Bloomberg Brief looked at these implied credit ratings. At that time, the three most likely candidates to be downgraded were Portugal, Belgium and Spain.

Regardless of what happens in DC, the US is now flirting with a credit downgrade. The negative effects of that will filter down to state and local government debt.

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