Tuesday, August 16, 2011

Fitch Ratings Affirms USA at AAA, Outlook Stable (Video) *Some credit rating agencies rate USA lower*

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Fitch reaffirmed the USA sovereign debt credit rating at AAA, outlook stable


Some USA Sovereign Credit Ratings at a Glance
Moody's Investor Service: AAA
Fitch Ratings: AAA
Standard & Poor's: AA+
Egan-Jones: AA+
Dagong Global Credit: A+
Weiss Ratings: C- equivalent to BBB-

USA Sovereign Credit Rating Overview (Major Credit Rating Agencies) Fitch Ratings affirmed USA at AAA, with a stable outlook, on August 16, 2011. Standard and Poor's lowered the credit rating of the United States of America from AAA to AA+, with a long-term negative outlook, on August 5, 2011. The negative outlook indicates the rating could be lowered again within the next two years. Moody's Investor Service affirmed the USA at AAA, but with a negative outlook, on August 2, 2011.

Fitch Affirms United States at AAA; Outlook Stable (August 16, 2011) "The affirmation of the US 'AAA' sovereign rating reflects the fact that the key pillars of US's exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base. Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks'."

USA Sovereign Credit Rating Overview (Other Credit Rating Agencies) Dagong Global Credit of China initiated coverage of sovereign credit in July 2010 and the rating of the United States of America was AA. Dagong downgraded the USA to A+/negative in November 9, 2010 then reiterated the USA negative outlook on July 14, 2011, which was repeated on August 2, 2011. Weiss Ratings of the USA is the toughest, initiating coverage of the USA on April 28, 2011 with a credit rating of C (Fair), which is equivalent to BBB used by the major credit rating agencies The USA was then downgraded further to C- on July 15, 2011, which is equivalent to BBB-. Weiss Ratings challenged the three major credit rating agencies, Standard and Poor's, Fitch Ratings, and Moody's Investor Service, on May 10, 2010 "to downgrade the long-term debt of the United States before it's too late" to AA+. The challenge was reissued on August 8, 2011 to Fitch and Moody's. Egan-Jones of the United States downgraded the United States from AAA to AA+ on July 18, 2011. See earlier post regarding these other credit rating agencies, S&P Was Not First Rating Agency to Downgrade USA (Video) *China's Dagong Global Credit never rated America at AAA*.

U.S. Market Outlook, Fitch's AAA U.S. Credit Rating Aug. 16 (Bloomberg) -- Scott Wren, senior equity strategist at Wells Fargo Advisors LLC, talks about the outlook for the U.S. stock market. Wren, speaking with Lisa Murphy on Bloomberg Television's "In the Loop," also discusses Fitch Ratings's affirmation of its AAA credit rating for the U.S. (Source: Bloomberg) Commentary begins at 1:50




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Monday, August 8, 2011

S&P Downgrade Massacre of USA Government Agencies! (Video) *FDIC, NCUA, FHLB, FCB, FNMA, FHLMC credit ratings cut*

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"It ain't over til it's over" (Yogi Berra)


USA Sovereign Credit Rating Overview Standard and Poor's lowered the credit rating of the United States of America from AAA to AA+, with a long-term negative outlook, on August 5, 2011. The negative outlook indicates the rating could be lowered again within the next two years. Fitch Ratings continues the USA at AAA, with a stable outlook, but this is currently under review with a report due by the end of August. Moody's Investor Service reaffirmed the USA at AAA, but with a negative outlook, on August 2, 2011. The USA has never before had less than a AAA credit rating.

S&P Downgrade Massacre Standard and Poor's lowered the credit ratings of a variety of United States agencies and government sponsored entities, with long-term negative outlooks, on August 8, 2011. S&P refers to these institutions as "government-related entities" (GREs) and have a "very high likelihood of receiving support from the government (U.S. federal), if needed". These ratings were downgraded from AAA to AA+ or AA-, to correspond with the USA sovereign credit rating. The negative outlook indicates the rating could be lowered again within the next two years. The USA guarantees the debt of plus provides financial assistance, if necessary, to these institutions. Therefore they were correspondingly downgraded. These were:
FHLB AA+: Federal Home Loan Banks, 10 of the 12 banks in the system, including senior debt of the overall FHLB System, Chicago and Seattle FHLBs already rated AA+
● FFCB AA+: Federal Farm Credit Bank, senior debt of the overall FCB System, the 4 individual farm member banks not affected and continue stand-alone as "a+"
● FNMA AA+, "Fannie Mae": Federal National Mortgage Association, already in conservatorship, relies on U.S. Treasury quarterly capital injections, reaffirmed "A" subordinated debt, "C" preferred stock ratings, and "A-1+" short-term credit issue ratings
● FHLMC AA+, "Freddie Mac": Federal Home Loan Mortgage Corporation, already in conservatorship, relies on U.S. Treasury quarterly capital injections, reaffirmed "A" subordinated debt, "C" preferred stock ratings, and "A-1+" short-term credit issue ratings
FDIC AA-: Federal Deposit Insurance Corporation, 126 debt issues by the Temporary Liquidity Guarantee Program
● NCUA AA-: National Credit Union Association, 4 debt issues by the Temporary Corporate Credit Union Guarantee Program
Other AA+: Depository Trust Company, National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Options Clearing Corporation.

S&P Statement, August 8, 2011: Ratings On Select GREs And FDIC- And NCUA-Guaranteed Debt Lowered After Sovereign Downgrade:
● On Aug. 5, 2011, Standard & Poor's lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'.
● As a result, we have also lowered the long-term issuer credit ratings and related issue ratings on select government-related entities (GREs) to 'AA+' from 'AAA'.
● The issuer credit ratings of these financial institutions and their relevant debt issues are removed from CreditWatch, where they were placed July 15, 2011.
● 
The outlooks for all 12 FHLBs, and the issue level ratings for Fannie Mae, Freddie Mac, the FHLB System, and the Farm Credit System are negative.

S&P Downgrades Fannie, Freddie Credit Ratings Markets Hub: What Should Investors Do? SmartMoney's Jack Hough outlines how investors should look at the long-term economic picture for the U.S. following the downgrade, as well as the impact on the housing market.





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