Moody’s loves to warn that maybe, possibly, someday the US or the UK might not alwaays be AAA-rated. They always hedge their comments a lot — and always make it sound like a downgrade would be a very var-off possibility — but the fact that they keep making noises about it is still important.
Bloomberg: Moody’s Investors Service said its top debt ratings on the U.S. and the U.K. could “test the AAA boundaries” because their public finances were worsening in the wake of the global financial crisis.
The U.K. and U.S. had “resilient” AAA ratings, as opposed to the “resistant” top ratings on Canada, Germany and France, Moody’s said in a report today. None of the top-rated countries were “vulnerable,” or had public finances that were “stretched beyond the point of ‘no return’ to the AAA category,” according to the report.
It’s the pound that’s really getting shellacked following the report:
The British pound fell against all of its 16 most-traded counterparts, dropping as much as 0.4 per cent to $1.6381 versus the dollar. Public finances in “resilient” AAA-rated countries are “deteriorating considerably and may therefore test the AAA boundaries,” Moody’s said.