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S&P keeps AA+ rating, stable outlook on United States

Published 06/30/2016, 04:35 PM
Updated 06/30/2016, 04:40 PM
S&P keeps AA+ rating, stable outlook on United States
US10YT=X
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NEW YORK (Reuters) - Standard & Poor's said on Thursday it maintained its AA+ credit rating and stable outlook on the United States, saying positive and negative risks on its finances are balanced over the next two years.

"We base this on our expectation that the inherent economic and policy strengths of the U.S. will continue to offset its high level of debt and weak political cohesion," the rating agency said in a statement.

U.S. Treasury prices barely budged late on Thursday after S&P released its latest assessment on the world's biggest economy.

Benchmark 10-year Treasury yield (US10YT=RR) was last at 1.483 percent, up nearly 1 basis point on the day.

S&P's decision on the U.S. debt rating came the same day the agency downgraded its long-term rating on the European Union by a notch to AA from AA+ following Britain's vote last week to exit the economic bloc, which investors worry could hurt the region's business activity.

The U.S. economic growth, which has been sub-par by historic standards since the 2008-2009 global credit crisis, will likely outpace most other advanced economies in the aftermath of the Brexit referendum, it said.

It forecast long-term U.S. potential growth at 2 percent, which is below the 3.5 percent or so seen prior to the crisis.

"The pace of the U.S. rebound also compares favorably with that of other advanced economies. Indeed, following the UK's decision to leave the EU, this is even more likely to be the case," S&P said.

S&P stripped United States of its coveted AAA-rating in August 2011 due to its high level of debt and uncertainty about the federal government's ability to manage that debt load.

Federal debt burden as a share of the economy remained twice its 2007 level, it said on Thursday.

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