U.S. Creditworthiness Hits Record Low The latest U.S. government budget projects a staggering deficit of $1.75 trillion this year, and publicly held debt is expected to expand by $9.57 trillion, to $15.37 trillion, over the next decade.
But as the U.S. government commits its full faith and credit to stemming financial panic and restoring the nation’s economy — and by extension that of the world — to vigorous health, its standing in the eyes of investors is plumbing unprecedented depths.
As revealed in the semiannual Institutional Investor Country Credit survey, the U.S. sees its creditworthiness drop by 5.0 points, to 88.0, on a scale of zero to 100. It now ranks No. 15 among the 177 countries in the survey, one place behind Belgium, a debt-plagued and barely governable state that might cease to exist if Flemish and French-speaking separatists had their way.
Creditworthiness has declined around much of the world, too, as the U.S. subprime crisis has morphed into a global recession. Survey respondents mark down nearly every industrialized country in North America, Western Europe and Asia. Even most emerging-markets economies, which many had thought immune to U.S. woes only a year ago, suffer significant declines.
The ranking, which Institutional Investor has been publishing since 1979, is based on a survey of senior economists and risk analysts.
How the Ratings Are Compiled The Country Credit ratings developed by Institutional Investor are based on information provided by senior economists and sovereign-risk analysts at leading global banks and money management and securities firms. The respondents have graded each country on a scale of zero to 100, with 100 representing the least likelihood of default. We also asked participants to rank ten political, economic and financial indicators in order of their importance for each region and for selected countries. Participants’ responses were weighted according to their institutions’ assets. Names of respondents are kept strictly confidential.
The March 2009 Country Credit survey was conducted by II staff under the guidance of Senior Editor Jane B. Kenney