The U.S. AAA Rating and the Debt Ceiling Standoff

The credit fundamentals underpinning the AAA rating of the United States are, in many ways, unparalleled. DBRS Morningstar has thus far maintained a AAA rating on the U.S. because we still believe it is highly likely that Congress will raise the debt ceiling prior to the X-date and the U.S. Treasury will continue to meet all of its obligations. However, we are concerned that political polarization in the context of a divided congress poses some risk to the U.S. government’s willingness to ensure all debts are paid on time and in full.

“Although the U.S. has considerable credit strengths, the debt ceiling impasse poses a potential threat to the United States’ AAA rating,” notes Michael Heydt, Senior Vice President, Global Sovereign Ratings. “Judging from the latest data on net inflows into the Treasury General Account, we see little reason to assume Congress and the Administration will have significantly more time beyond early June.”