Ouch! U.S. booted from Triple-A debt club

Source: CNN money
By Annalyn Censky @CNNMoney August 6, 2011: 2:52 PM ET

These 15 countries (and the Isle of Man) have the world's highest credit rating, AAA from both Moody's and Standard & Poor's. The U.S. lost that high standing Friday, when S&P downgraded it to a AA+ rating.

NEW YORK (CNNMoney) -- The Triple-A debt club just got even more exclusive: Late Friday, the United States was booted out of a prestigious group of countries that boast a spotless credit rating.

Now only 15 countries (and the very small Isle of Man) hold the triple-A rating from both Standard & Poor's and Moody's.

Canada, France, Germany, Norway, Sweden and Switzerland are among those with the undisputed stamp of approval -- so is Isle of Man, a British crown dependency off the United Kingdom's west coast, and Singapore (both of which are too small to see on our CNNMoney map above.)

The triple-A rating enables nations to borrow funds at a low cost, because their governments are considered stable and their bonds safe.

S&P downgrades U.S. credit rating

The United States for example, has seen its dollar become the world's No. 1 reserve currency because its bonds are held in such high regard by investors. They're backed by the "full faith and credit of the U.S. government" -- which until now, has never seriously been called into question.

On Friday, S&P downgraded the United States to AA+, an investment grade level just one notch below triple-A. It marked the first time the world's largest economy has been downgraded, since Moody's first gave the country a credit rating in 1917.

S&P cited estimates that U.S. government debt would balloon to 79% of the size of the entire U.S. economy by 2015, and 85% by 2021 -- a level S&P says is consistent with AA+ rated countries.

In comparison, estimates from the International Monetary Fund show triple-A rated Canada's debt is likely to only rise to 34% of its economy by 2015, and Germany's is forecast to rise to 52%. (The IMF does not publish forecasts out to 2021).

Your money in a AA-rated U.S.

The debt of Belgium, another AA+ rated country on S&P's list, is expected to grow to 85% of GDP by 2015, according to the IMF.

Abu Dhabi, with a AA rating, is just a step below AA+. Also in that group are Bermuda, Chile, Qatar, Slovenia and Spain.

Meanwhile, China -- the world's second largest economy -- is rated two notches below the United States, at AA-.

Greece -- the lowest rated country in the world -- is forecast to see its debt well exceed the size of its economy, at 149% the size of its GDP in 2015. 

First Published: August 6, 2011: 11:47 AM ET

Canada keeps AAA credit rating

Image via Wikipedia

BY ERIC LAM, POSTMEDIA NEWS JULY 28, 2011

As the debt spectacle continues in Washington, Moody’s Investor Service renewed Canada’s AAA credit rating on Thursday.

While all eyes are on the United States as it tries to hammer out a deal to raise its borrowing limit by Aug. 2, avoid a debt default and a possible debt downgrade, Canada sailed through its annual credit checkup with flying colours.

Moody’s said the country’s high resiliency, government financial strength and low susceptibility to risk were key to the top marks.

Here’s a breakdown of the reasons why Moody’s says Canada deserves the highest possible credit rating:

Economic strength: Very high.

Canada missed the worst of the financial crisis because of the financial strength of its banks and only a mild downturn in the housing market.

The country had a stronger rebound from the recession, with a 3.2-per-cent rise in gross domestic product, compared with 2.9 per cent south of the border. Moody’s said monetary policy and Ottawa’s stimulus program helped the recovery.

There are important differences between the Canadian and U.S. economies that affected Moody’s evaluation of Canada’s strength, including the fact that trade in goods and services makes up more than half of Canada’s GDP, compared with less than one- third in the U.S. This points to a greater degree of openness in the economy, it said.

Canada also has lower federal debt and a stronger banking system and housing market, as well as a higher domestic saving rate, resulting in less reliance on external financial markets.

Institutional strength: Very high.

Fiscal discipline at the Bank of Canada, inflation control, government effectiveness and rule of law all rank highly.

Economic and fiscal policies have remained stable for the past 15 years under Liberal and Conservative governments. Some tax differences exist, but the overall goal of fiscal balance and declining debt has been a constant.

While the proportion of total government debt credited to provincial, territorial and local governments is the highest among major countries, and Moody’s judges the risk of the federal government having to step in to assist these governments with their debt payments as high, it said local ratings indicate little risk that such assistance would actually be needed.

Government financial strength: Very high.

This evaluation is based on a well-established pattern of budget surpluses at the federal level, except during exceptional circumstances such as the financial crisis, leading to declining government debt and debt ratios since the 1990s.

Susceptibility to event risk: Low.

The most important risks are related to the housing market and to separatism in Quebec, although the probability of either affecting Canada’s rating is quite low.

© Copyright (c) The Montreal Gazette

Read more:http://www.montrealgazette.com/business/Canada+keeps+credit+rating/5175904/story.html#ixzz1UIAx3oiE

Moody’s maintains Canada Aaa credit rating

Moody’s Investor Services is renewing Canada’s triple-A debt rating, the highest possible.

In its annual report on Canada's sovereign ratings, the firm said the Aaa rating was warranted due to the country’s high degree of economic resiliency, efforts by Ottawa and the provinces to deal with their debt ratios over the coming years and other factors.

The economy’s very high degree of resiliency is demonstrated by a high per capita income, the large scale of the economy, and its diversity, says the Moody’s report. Natural resource industries, a competitive manufacturing sector, and a well-developed and well-regulated financial market also support the country’s resiliency.

While Canada’s public finances deteriorated as a result of the global financial crisis, the federal government and the provinces are now on a track of fiscal consolidation that will improve general government debt ratios over the next few years, according to Moody’s.

Although general government debt, including the debt of the provinces and municipalities, is similar to that of other large Aaa-rated countries, the federal government’s debt position by itself is relatively low. As the provinces are highly rated, Moody’s considers the contingent liability from this source to be low, despite the relatively large size of provincial debt.

Canada’s current account balance returned to surplus in 1999 and remained there until 2008, bringing down the reliance on foreign capital inflows. This has risen somewhat in the past two years but is still not considered a risk to financial stability. Canada’s susceptibility to event risk is low and is related to the housing market and to Quebec’s sovereignty issue.

S&P affirms Canada rating, lauds fiscal discipline

Reuters) - Ratings agency Standard and Poor's affirmed Canada's AAA rating on Friday and lauded the country's strong finances compared with its Group of Seven peers.

The review stood in sharp contrast to growing pressure on the ratings of many Western countries, highlighted by this week's downgrade to Greece's sovereign debt by Moody's Investors Service. [ID:nLDE63L28G]

Standard & Poor's affirmed Canada's AAA long-term and A-1+ short-term sovereign credit ratings with a stable outlook.

"Canada has what we view as strong public finances, a relatively diversified economy, stable public policy, and a sound financial sector," the agency said in a statement.

"The stable outlook reflects our opinion that Canada has the political capacity and will to respond quickly to changing conditions, and the strongest fiscal position of the five 'AAA' rated G7 sovereigns."

The other G7 nations with AAA ratings are the United States, France, Germany and Britain.

S&P cut the outlook on Britain's AAA rating to "negative" on May 21, 2009, a move that typically carries a one in three chance of a downgrade. [ID:nLL292085]

Some analysts have speculated the top-tier credit rating of the United States could be cut one day, an idea rejected by U.S. Treasury Secretary Timothy Geithner. [ID:nN16225360] [ID:nN18366282].

Canada's Conservative government, in presenting its annual budget last month, pledged to turn off the stimulus tap and curtail spending sharply after the economy recovers. [ID:nCFB000108]

"We expect the prevailing consensus on the need for robust public finances, across Canadian regions and political parties, to avoid a return to recurring, structural deficits, in the medium term," S&P said.

The agency also said Canada's financial system is well-developed and sound. The nation's banks did not require government bailouts during the economic crisis and have been ranked as the world's soundest by the World Economic Forum. (Reporting by Jeffrey Hodgson; editing by Rob Wilson)

CIC: COME TO CANADA WIZARD WORKING ITS MAGIC

Prospective immigrants and visitors to Canada now have a new interactive web tool at their fingertips to help them determine if they are eligible to come to Canada. Citizenship, Immigration and Multiculturalism Minister Jason Kenney announced today the launch of the Come to Canada Wizard.

“We understand that our application processes can be complex, but this new tool is a major service improvement,” said Minister Kenney. “The Wizard will make it easier for potential immigrants and visitors to navigate the application process.”

“The Wizard should also reduce applicants’ reliance on immigration consultants and hopefully will make the Department more efficient by decreasing calls to our Call Centre,” Minister Kenney added.

The Wizard simplifies the application process by matching applicants with the federal immigration option that best suits their specific circumstances. The Wizard does this by asking applicants a series of questions and, based on the answers, it provides the best options for them.

The Wizard leads applicants to a results page that breaks down the application steps and provides instructions and forms.

To view the Wizard, go to www.cic.gc.ca/cometocanada.