NOTE: Earlier we wrote that only two countries would maintain AAA ratings.
As we learned a year ago with the US credit rating downgrade, no country’s pristine AAA credit rating is safe.
Citi’s sovereign ratings team led by Michael Saunders, Robert Crossley, and Peter Goves sees the total number top-rated countries shrinking further in coming years.
From their recent note to clients:
Global outlook: only Canada and the Scandinavian countries are likely to retain a AAA-rating over the long-term
Over the longer-term, given Citi’s global economic projections and fundamentally weak backdrop, we continue to expect downwards rating pressure. The US is currently on Negative Outlook by both Moody’s and S&P and we continue to expect a one-notch downgrade over the next 2-3 years. We also envisage downwards ratings pressure for Japan over the next 2-3 years, predicated on longer-term debt sustainability trends. Canada and the Scandinavian countries are the only countries covered in our Sovereign Ratings Outlook that we believe rating agencies will maintain a “AAA Stable” status both in the near- and longer-term.
Here’s a round-up of current sovereign credit ratings via Citi:
Photo: Citi Investment Research & Analysis