trending Market Intelligence /marketintelligence/en/news-insights/trending/OZGxWpABU2rZBXm-FA96jw2 content esgSubNav
In This List

DBRS confirms US ratings


Global Capital Markets & SPAC Activity – H1 2021


Banking Essentials Newsletter: July Edition - Part 3


Banking Essentials Newsletter: July Edition - Part 2


Anticipate the Unknown Go Beyond Fundamentals to Uncover Early Signs of Private Company Credit Deterioration

DBRS confirms US ratings

DBRS confirmedthe United States of America's long-term foreign and local currency issuer ratingsat AAA and the short-term foreign and local currency issuer ratings at R-1 (high).

The ratingstrend remains stable.

The agency creditedthe U.S. Treasury's unmatched financing flexibility as the world's benchmark assetand reserve currency for the AAA rating. According to DBRS, these features allow the U.S. to provide low financingcosts and permit the government a "high capacity to service debt, even duringperiods of investor risk aversion."

Diversity, innovationand high productivity in the country's economy were also factored into the ratings.

DBRS attributedthe stable rating to the country's dependable recovery, along with its reductionin fiscal deficit. These factors, said the agency, will stabilize public debt toGDP in the coming years.

The agency furtherspecified job growth and government spending, and noted the 2.4% growth, in eachof the last two years.

On the otherhand, the slump in energy investment and dropping oil prices, plus weaker exportperformance, all work against U.S. growth. The agency also called the country'saging population and rising cost of health care the "greatest fiscal pressureover the medium term," as the government estimates that by 2026 mandatory outlaysto the pension and health care system will take up over half of federal expenditures.The spending is projected to increase to 14.9% of GDP in a decade, compared to the50-year average of 9.4%.

DBRS warnedthat if left unresolved, the entitlements could place more pressure on public debtand adversely impact long-term growth prospects by pinching discretionary funding.

Other issuesaddressed with the ratings were labor utilization, still at its weak level, andslow inflation, which has not reached the Federal Reserve System's 2% target.