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Moody's says US administration closure to be ‘credit negative’
(MENAFN) Credit rating agency Moody's cautioned on Monday that an administration closure in the US will be “credit negative” for the nation.
"While government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years," the agency noted in a report.
"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," it continued.
The rating agency stated that a potential closure would have the biggest effect on bodies that depend on federal funding for income or debt servicing compensations.
An administration closure might also have an impact on certain municipal issuers, mass transportation systems, as well as municipal housing sector bonds that depend on yearly federal funding.
"While government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years," the agency noted in a report.
"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," it continued.
The rating agency stated that a potential closure would have the biggest effect on bodies that depend on federal funding for income or debt servicing compensations.
An administration closure might also have an impact on certain municipal issuers, mass transportation systems, as well as municipal housing sector bonds that depend on yearly federal funding.
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