June 11, 2013 in Business

S&P boosts outlook on U.S. long-term debt

Strengthened finances, economy prompt upgrade to ‘Stable’ rating
Paul Wiseman Associated Press
 

WASHINGTON – Standard & Poor’s Ratings Services upgraded its outlook Monday for the U.S. government’s long-term debt. S&P cited the government’s strengthened finances, a recovering U.S. economy and some easing of Washington’s political gridlock.

The credit rating service raised its outlook to “Stable” from “Negative,” which means it’s less likely to downgrade U.S. debt in the near future.

S&P also reaffirmed the government’s “AA+” long-term and “A-1+” short-term unsolicited sovereign credit ratings. The long-term rating remains a notch below S&P’s top grade.

S&P had downgraded the U.S. government’s long-term credit rating in 2011 after a standoff in Congress over whether to raise America’s borrowing limit.

Stan Collender, a budget expert with the Qorvis Communications consultancy, downplayed the significance of Monday’s move. S&P’s downgrade two years ago had no lasting effect on U.S. interest rates, the stock market or the value of the dollar. Long-term U.S. interest rates remain historically low – evidence that global investors remain confident in the government’s creditworthiness.

Mary Miller, undersecretary for domestic finance at the Treasury Department, said, “We’re pleased that they (S&P officials) are recognizing the progress in the U.S. economy and fiscal results.”

Asked whether she was concerned that this action could take pressure off Congress to take further action on the budget deficit and increase the debt ceiling later this year, Miller said, “I haven’t given that any thought, but obviously we would like to see progress on things like the U.S. debt ceiling.”

Treasury is currently taking various actions to provide headroom under the current debt ceiling, but it is expected to exhaust those maneuvers sometime this fall.

© Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email