Sean Egan: US Credit Rating Downgrade Not Likely This Year

Monday, 07 Jan 2013 08:21 AM

By June Manning

  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
Egan-Jones, the independent ratings agency that cut the U.S. sovereign credit rating twice in 2012, has no plans of further downgrading the country's rating in 2013.

"This latest round [of fiscal cliff negotiations] indicates a sign of health. You have a major ideological clash going on in Congress and many people uncomfortable with it, but it is part of democracy. The more positive light is that we actually have a deal and can move forward," Sean Egan, managing director of Egan-Jones, told CNBC.

"We've gotten a lot more comfortable about the U.S., and we probably won't take additional negative actions for the foreseeable future," he added.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

Citing concerns about little progress in reducing the federal debt, Egan-Jones cut the U.S. credit rating to AA from AA+ last April. Then in September, it lowered the rating to AA-, because of concerns that the quantitative easing from the Federal Reserve would hurt the country's credit quality.

Of the four major credit agencies, Egan-Jones has the lowest rating for the United States. Standard & Poor's has assigned a AA rating, while Moody's Investors Service and Fitch both have AAA ratings for the country, and all three have negative outlooks for the United States.

Egan-Jones applauded U.S. lawmakers for averting the fiscal cliff, which involved Congress passing legislation that averted $600 billion in spending cuts and tax hikes.

However, Moody's has a less optimistic view on the country. It is concerned about the fiscal cliff deal, which it believes will have little impact on improving the government's debt ratios over the medium term, adding that lawmakers must do more to remove the negative outlook on its debt rating, Reuters reported.

"Our ratings stance is to wait and see what the outcome of all of this is in the next few months, before we make any decision on the rating outlook or the rating itself," Steven Hess, lead U.S. sovereign credit analyst at Moody's, told Reuters.

Moody's added that without additional deficit reduction measures, the rating could be negatively affected further.

Nonetheless, Sean Egan said he does not anticipate other major ratings firms issuing a downgrade for the United States this year.

"The major issue for the other ratings firms is whether they are going to take [their rating] from a negative outlook to negative watch – that's the next step, and the downgrade happens after that. [But] a downgrade by another major firm is unlikely in my opinion," he noted.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Retype Email:
Zip Code:
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Meat, Seafood Prices Rising on Drought, Disease

Friday, 25 Jul 2014 09:46 AM

Overall U.S. food inflation will remain near the historic norm in 2014, even as prices for meat and seafood are pushed h . . .

Economist Joel Naroff: Economy 'Mediocre,' but Improving

Thursday, 24 Jul 2014 14:09 PM

The economy appears to be something of a mixed big at the moment.
It shrank 2.9 percent in the first quarter, but  . . .

ABC News: Kentucky Town Opens Public Gas Station to Fight Big Oil

Thursday, 24 Jul 2014 14:42 PM

City officials in Somerset, Kentucky, a town of about 11,000 people, are taking on big oil companies by opening a taxpay . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved