Just what is a AAA rating and why did the UK lose it? (2024)

FAQs

Why did the UK lose AAA rating? ›

Moody's, the first of the major agencies to remove the UK from the elite club of AAA countries, blamed "subdued growth" and a "high and rising debt burden" for the decision to cut the rating by one notch to AA1.

As of Aug. 1, the U.S. Treasury owed $32.6 trillion, both to bondholders and other parts of the federal government. That's part of the reason that Fitch cut the U.S. government's long-term creditworthiness by one notch, from AAA – its highest rating – to AA+.

Moody's and Fitch had already downgraded the UK, from Aaa and AAA to Aa1 and AA+ respectively, in 2013 when the government announced further austerity measures. Triple-A is the highest rating that can be given, and triple-D is the lowest. Anything below a B, however, is viewed as pretty risky.

On August 1, 2023, Fitch Ratings, one of the country's three major credit rating agencies, announced that it had downgraded the US credit rating from AAA to AA+.

2011 Standard & Poor's Downgrade

Previous Downgrade: On August 5, 2011, S&P lowered its U.S. credit rating from AAA to AA+.

The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will "remain sluggish over the next few years". The ratings agency Moody's became the first to cut the UK from its highest rating, to Aa1.

Ratings Affirmed: China's 'A+' rating is supported by its large and diversified economy, still solid GDP growth prospects relative to peers, integral role in global goods trade, robust external finances, and reserve currency status of the yuan.

Germany 'AAA/A-1+' Ratings Affirmed; Outlook Stable.

Some of the top examples include Australia, Canada, Denmark, Germany, Sweden, Switzerland, Norway, and Hong Kong. These are all countries that generally carry a credit rating of AAA.

What is Moody's rating of China? ›

The affirmation of the A1 rating reflects China's financial and institutional resources to manage the transition in an orderly fashion.

Canada is one of the few countries in the world with a AAA credit rating from at least two of the top global rating agencies.

The agency—which lowered the US from the highest AAA classification to the notch lower AA+ rating—said the slight downgrade was due to a “steady deterioration in standards of governance” in recent decades on fiscal and debt matters, among other issues.

Moody's, a leading risk assessment agency, has lowered the United States government's credit ratings outlook from “stable” to “negative,” citing political polarization in Congress.

Some of the top examples include Australia, Canada, Denmark, Germany, Sweden, Switzerland, Norway, and Hong Kong. These are all countries that generally carry a credit rating of AAA.

Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

'aaa' ratings denote the best prospects for ongoing viability and lowest expectation of failure risk. They are assigned only to financial institutions with extremely strong and stable fundamental characteristics, such that they are most unlikely to have to rely on extraordinary support to avoid default.

The S&P and Fitch AAA ratings are the highest assigned to any debt issuer. An AAA rating is the equivalent of the Aaa rating issued by Moody's. AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.