Credit rating (US)

What a sovereign rating measures

Credit rating agencies assess how likely a borrower is to repay in full and on time. For a government that borrows in its own currency, the question is less about ability to pay than about willingness and governance: political stability, the path of debt and interest costs, and the strength of institutions. The top grade is AAA at S&P and Fitch, and Aaa at Moody’s.

Three downgrades

• S&P lowered the United States to AA+ in August 2011, days after a debt ceiling standoff was resolved at the last moment, citing political brinkmanship and the lack of a credible plan to stabilise the debt.
• Fitch followed in August 2023, pointing to an erosion of governance, repeated debt ceiling confrontations and a rising debt burden.
• Moody’s, the last of the three to keep the US at its top grade, moved it to Aa1 in May 2025, citing federal debt and interest costs that had grown well above those of similarly rated countries.

Each downgrade was a single notch. The United States remains one of the highest-rated borrowers in the world.

What changed in practice

Less than the headlines suggested. After the 2011 downgrade, investors bought more Treasuries and yields fell, because in times of stress US government debt is still where money goes for safety. Few investment rules require AAA ratings specifically, and many that once referred to ratings now refer to Treasury securities directly.

Why they still matter

The downgrades are a signal rather than a shock. They record a gradual change in how independent analysts view the fiscal outlook: not a risk that the US cannot pay, but a combination of rising debt, rising interest costs and a political system that repeatedly takes itself to the edge of a self-inflicted default. Each new debt ceiling fight is read partly through that lens.