Moody's Downgrade Of The U.S. To Aa1 And The Ripple Effect On Bond Ratings

2025-05-28 20:15:00 ET

Summary

• The Moody’s downgrade of the US rating to Aa1 from Aaa had a ripple effect through the bond markets, in the form of downgraded credits.
• In some respects, the downgrade was a nonevent because the US had already lost its S&P (2011) and Fitch (2013) AAA ratings years ago.
• Some global systemically important banks, or G-SIBs, had their deposit and unsecured debt ratings changed because of Moody’s action on the US.
• Moody’s also announced that the US government downgrade had no impact on the score for the macro profile of the US banking system, which remains Strong+.

By Patricia Healy, CFA

The Moody’s downgrade of the US rating to Aa1 from Aaa had a ripple effect through the bond markets, in the form of downgraded credits that depend on government support, assume a certain level of government support, or are supported by other federal government securities that also lost the Aaa rating....

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