Brian Easton: Credit Ratings And International Financial Standing

The recent reduction in the US credit rating signals that market lenders are not happy with the US fiscal arrangements. New Zealand’s lower rating is a warning that we could do better too.

Fitch recently lowered its long-term credit ratings rating of US government debt from the top grade of AAA to AA+. Financial markets hardly moved – they had already incorporated Fitch’s reservations in their thinking.

Oliver Hartwich: False security in high ratings

After the Global Financial Crisis of 2008, markets became concerned about Greece’s ability to repay its debts.

Until the crisis hit, rating agencies were relaxed about Greece’s solvency. Fitch rated the country as ‘A’ in October 2008, Standard & Poor’s gave it an ‘A-’ in January 2009, and Moody’s gave it an ‘A1’ in February 2009.

But by 2011, all three agencies had downgraded Greek debt to junk status.

Ratings may seem fine and markets relaxed, but sentiment can change quickly.