Fitch warns of something dramatic: the safest government securities have simply disappeared from the market

By RockedBuzz 2 Min Read

On August 2, Fitch withdrew the “AAA” sovereign debt rating from the United States, downgrading the rating of long-term US sovereign debt obligations by one step to “AA plus”.

In its analysis on Tuesday, Fitch Ratings highlighted: since the American downgrade, the “AAA”-rated sovereign bond portfolio is no longer the most valuable public debt category on the world market.

At the time of the downgrade of the United States, the amount of US federal government debt circulating in the markets was 32,600 billion dollars, almost twice the amount of other sovereign debts calculated in dollars, according to Fitch’s sector analysis.

According to the credit rating agency’s assessment, all this means that it has an “AAA” rating on the bond markets the nominal ratio of public debt fell dramatically, from the previous level of more than 40 percent to barely 6 percent.

As a consequence of this, the nominal market volume of sovereign debt with a speculative – i.e. non-investment-recommended – classification now exceeds the “AAA” category government debt assets for the first time, which its total value decreased to around 5 thousand billion dollars, according to Fitch Ratings’ analysis in London on Tuesday.

The credit rating agency emphasizes that in the past sovereign obligations with a rating of “AAA” were always the most valuable public debt category on the market, even with the fact that since the eurozone debt crisis, the number of sovereign debtors registered in the “AAA” rating band, which is currently the highest on Fitch’s list, has been decreasing. only nine.

Cover image source: Shutterstock

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