Ex-S&P Analyst Who Cut US Rating in 2011 Says AAA Is No God-Given Right
(Bloomberg) -- It's taken more than a decade, but David Beers is feeling something like vindication after Fitch Ratings downgraded US government debt this week.
The former head of S&P Global Ratings' sovereign debt scoring committee was one of the analysts behind the controversial decision to cut the US credit grade back in 2011. He warned Wednesday that issues dogging the world's top economy now are reminiscent of those that drove S&P's downgrade 12 years ago — and some have escalated. That includes political brinkmanship surrounding the US debt ceiling.
“The underlying fiscal position and underlying debt trajectory has picked up pace,” Beers, who is now a senior fellow at the Center For Financial Stability, said on . “AAA is the top rating any rating agency can assign, but of course, the US and any other sovereign that's being rated has no god-given or automatic right to that.”
In August 2011, Beers and John Chambers shocked markets by stripping the US of its AAA grade at S&P, dropping it by one level to AA+ for the first time in history. Fitch on Tuesday cut the US credit grade to AA+, triggering its own wave of criticism.
The move reinforces that Washington policymakers still have room to improve the country's fiscal dynamics — even if a one-notch downgrade to AA+ signals only a mild deterioration of creditworthiness, said Beers.
Read more: Fitch's US Credit Downgrade Sparks Criticism Along With Unease
“It's fair to say that the rating agencies, based on their own criteria, have been pretty timid in their actions,” he said. “If anything, Fitch's action is simply confirming what S&P decided back in 2011, and here we are in 2023.”
A representative for S&P didn't reply to request for comment.
--With assistance from Katie Greifeld, Romaine Bostick and Michael Mackenzie.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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