MNI BRIEF: Fitch Cuts US Credit Rating To AA+ from AAA

Fitch cut its rating on U.S. government debt to AA+ from the top AAA grade Tuesday, citing elevated borrowing and political brinksmanship around the debt ceiling.

"The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions," the ratings company said in a statement from London after market close.

Fitch also cited "a steady deterioration in standards of governance over the last 20 years" even with the most recent debt ceiling agreement set to run until January 2025. The general government deficit will grow to 6.3% of GDP this year from 3.7% in 2022, Fitch estimates, growing again to 6.9% in 2025. Debt is seen climbing from 100% of GDP before the pandemic to more than 118% by 2025.

Treasury Secretary Janet Yellen said in a separate statement that "the change by Fitch Ratings announced today is arbitrary and based on outdated data," and "Fitch’s decision does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong."