Wednesday, July 13, 2011

China's Dagong Rating Firm Says Will Downgrade US Even if Debt Limit Raised

China's Dagong rating firm has threatened to downgrade US debt soon, even if Congress raises the US debt limit.  While Fitch and S&P still list the US as AAA, Dagong already merely rates US debt as A+.
Dagong tells it like it is.  If the debt limit is raised, this means the US will borrow more funds they can't repay.
If the debt limit is not raised, TSHTF immediately, and US debt will be immediately significantly downgraded.

The debt crisis you're watching currently with Greece, Italy, etc will soon be played out much closer to home.
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BEIJING - The US' sovereign credit rating is likely to be downgraded regardless of whether the US Congress reaches an agreement on raising its statutory debt limit, Chinese rating agency, Dagong Global Rating Co Ltd, said on Monday.
"If the debt limit is raised and the public debt continues to grow, it will further damage the US' debt-paying ability, which is a key factor in Dagong's evaluation, and we will consider lowering its ratings accordingly," said Guan Jianzhong, chairman and CEO of Dagong.
"If the raised limit fails to pass and the US faces default, the rating will be immediately and substantially downgraded," he said.
According to Guan, the downgrading is really just "a matter of time and extent".

Guan spoke after the US Treasury Department warned that the nation will exhaust its borrowing authority under the $14.29 trillion debt limit on Aug 2 and urged Congress to raise the statutory debt limit "to avoid the catastrophic economic and market consequences of a default crisis".

The three major international rating agencies, Moody's Investors Service Inc, Fitch Inc and Standard & Poor's Financial Services LLC (S&P) each warned in June that they would downgrade the US sovereign credit rating in the event of a default.

The country's rating now stands at A+ in domestic and foreign currency on Dagong's list, with negative outlooks to its future, much lower than the result of the US rating agencies.

Dagong's rating was downgraded from AA on Nov 9 after the US government announced a second round of quantitative easing (QE2).
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