Reuters: Will Washington truce stick? Wall St assesses U.S. debt ceiling risk

An apparent truce in the U.S. debt-ceiling standoff in Congress has offered some relief to Wall Street investors on edge about a possible debt default, but analysts are left assessing the risk of a repeat crisis as the year closes out, writes Karen Pierog for Reuters, citing research from Credit Benchmark.

The major credit rating agencies do not expect the U.S. will default, but if it did, the country’s rating would be downgraded until a resolution was found. While Moody’s and Fitch rate the US at Aaa and AAA respectively, S&P famously cut the rating down a notch to AA-plus in 2011.

Major financial institutions have considered the United States an AA-plus-rated credit since October 2020, down from AAA where it stood since 2017, according to David Carruthers, head of research at Credit Benchmark, a financial data and analytics company that collates the internal credit risk views of more than 40 institutions around the world, including 15 global systemically important banks.

Reuters, October 7, 2021.

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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.