Despite a temporary budget compromise in Washington, China’s Dagong agency has downgraded the United States. Dagong maintains a negative outlook on the sovereign credit, as revenue and GDP fail to keep up with the country’s massive debts.
The Beijing-based Dagong agency, one of the few notable non-US based credit rating agencies, has downgraded America to an ‘A -‘rating from ‘A’.
The move came shortly after Congress and President Obama narrowly averted a technical default. Fear the world’s largest economy may default on its widely dispersed Treasury Bonds is making investors re-evaluate political and financial stability in the US.
“The government is still approaching the verge of a default crisis, a situation that cannot be substantially alleviated in the foreseeable future,” the Dagong agency said in a press release.
Ratings by Dagong are not internationally recognized, and will likely hold only symbolic, and not market, implications.
According the Chairman of Dagong, Guan Jianzhong, current agencies tend to arbitrarily favor developed economies.
On Tuesday, Fitch Agency put the United States’ Triple A rating under a negative watch. The debt ceiling debacle in 2011 prompted a drop in the superpower’s rating from AAA to AA+.
Standard and Poor’s hasn’t issued a warning or downgrade, but released a statement Wednesday calculating the government shutdown didn’t save, but rather cost the US $24 billion.
“The bottom line is the government shutdown has hurt the US economy,” the S&P statement said.
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