3 ms·

What are the practical effects of this?

• rozenmd 3y ago
  Normally, interest rates for debt increase as lenders factor in additional risk. Realistically with it being the USA, probably not a large impact.
• pestatije 3y ago
  makes them more trustworthy than say moodys or standard & poors, especially after the subprime debacle
  • pirate787 3y ago
    Standard and Poor's downgraded the US to AA+ in 2011.
    • pestatije 3y ago
      there you go, slowly and steadily going under
• stephen_g 3y ago
  Credit ratings of countries that control their own central bank and only issue bonds in their own currency are kind of just make-believe. They only matter as much as people play along… Although the debt limit thing is a risk, there’s no practical or financial reason why the US would ever default on its bond payments, but the debt limit brinkmanship creates a potential to default due to politics (for no real reason).
  • jwestbury 3y ago
    They're not make-believe. Plenty of insurance companies and pension funds can only invest in AAA-rated investments. Will their policies change to accommodate downgrades? Possibly. But there's a very real risk of lessened demand for treasuries.
• Someone 3y ago
  There may be investment funds that have internal rules limiting how much they can invest in lower rated countries. Fitch isn’t the primary rating agency, the downgrade is fairly small, and this being about the USA, I don’t expect huge effects, though.