SINGAPORE, Oct 17 (IFR) - Chinese rating agency Dagong has
downgraded the United States to A- from A and maintained a
negative outlook on the sovereign's credit.
The agency suggested that, while a default has been averted
by a last minute agreement in Congress, the fundamental
situation of debt growth outpacing fiscal income and GDP remains
unchanged. "Hence the government is still approaching the
verge of default crisis, a situation that cannot be
substantially alleviated in the foreseeable future," Dagong said
in a press release.
Dagong's ratings are hardly followed outside of China. The
agency also classifies most countries it follows very
differently from major agencies such as Moody's, Standard &
Poor's and Fitch.
For instance, like the major agencies, Dagong rates Norway
Triple A. However, the US was rated A and the United Kingdom has
an A+ rating with Dagong, while Moody's for one, has the UK at
and the US at Aaa, the highest level on the New York-based
Yet, the Chinese agency is not alone in pointing out that
the creditworthiness of the United States is not as good as it
once was. Yesterday, Fitch put the Triple A rating it gives to
the US under negative watch.
In August 2011, Standard & Poor's downgraded the US to AA+
after a protracted debt ceiling debate in Congress brought the
government to the verge of a shutdown.
Apart from the symbolic meaning of the downgrade, though,
Dagong's move is expected to have no effect on markets.
(Reporting By Christopher Langner)