KBRA Releases Research – KBRA’s Confidence in the U.S.’s AAA Rating

KBRA releases a report on its confidence in the U.S.’s AAA credit rating.

In contrast to several other credit rating agencies (CRA), KBRA remains confident in our AAA credit rating on the U.S., and we also remained confident in that opinion throughout the recent debt ceiling debate. This perspective is anchored by our focus on the fundamental pillars of the U.S.’s credit strengths which has provided a steady hand despite the noise, headlines, and frequent bitterness of the government’s political discourse. Specifically, KBRA always believed that the U.S. Treasury retained options to ensure that debtholders would be paid during the recent debt ceiling political brinksmanship. KBRA also believes that policymakers ultimately understood the catastrophic economic and financial consequences of a default on the country’s debt obligations. If we did not believe those things, and or if we believed the current U.S. deficits were unaffordable, our rating would not be AAA.

We note that some CRAs have different views and their credit opinions appear to be more susceptible to political noise, while their ratings have become more volatile during the debt ceiling debate. Some CRAs were so disturbed by the political discourse that they have adjusted their view of the U.S. government’s fiscal posture and its impact on fundamental credit quality. However, we believe that following the path of lowering the U.S. rating because of its current fiscal deficits or for its rancorous politics is ill-conceived.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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