The U.S. is able to issue and support more debt than other AAA-rated sovereign borrowers because of the dollar’s status as the world’s main reserve currency and its diversified economy, Fitch Ratings said.
Fitch’s view of the U.S.’s top credit rating, which it affirmed Aug. 16, rebuts Standard & Poor’s decision on Aug. 5 to downgrade the nation to AA+ from AAA. S&P said lawmakers failed to cut spending enough to reduce record deficits. Moody’s Investors Service affirmed its top U.S. ranking last week.
“Leaving aside arguments about debt dynamics, the U.S.’s relative wealth and productivity, and political will, the U.S. is anything but just another sovereign,” Fitch analysts Jeremy Carter and Alex Griffiths wrote today in a report. “The pre- eminence of the U.S. dollar as the global reserve currency means the U.S. government effectively has first call on excess global savings and supports low real interest rates.”
Full story: Fitch Says U.S. Can Issue More Debt Than Other AAA Nations – Bloomberg.