Germany’s Rating Agency Feri Downgrades US Government Bonds: AAA to AA!

See also:

China’s Rating Agency: ‘In Our Opinion The United States Has Already Been Defaulting’


German Rating Agency Feri Downgrades US Government Bonds: AAA to AA! (ZeroHedge, June 10, 2011):

The first Western downgrade of US government bonds is a fact! The German credit rating agency Feri lowered its rating on US debt by a full notch, from AAA to AA.

Here is the German press release:

Feri Downgrades US Gov Debt AAA to AA

Here’s the English translation:

Homburg, 8 June 2011 – The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency’s credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.

“The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, “said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. “Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted.”

For the third consecutive year the deficit of the United States is in double digit percentages relative to gross domestic product (GDP). “Deficits of such magnitude are not a sustainable fiscal policy. We would reconsider the rating when the U.S. government creates a long-term sustainable budget,” said Schmidt.

Feri Rating is listed on the Federal Financial Supervisory Authority (BaFin) as an EU credit rating agency approved and created with more than 20 years experience in sovereign ratings. Every month, the Feri analysts evaluate sovereign credit ratings from the perspective of a foreign investor based on the ability and willingness of countries to repay their debts. The credit ratings have eleven possible gradations between “AAA” (best credit) and “Default”.


2 thoughts on “Germany’s Rating Agency Feri Downgrades US Government Bonds: AAA to AA!

  1. Am I alone in finding it ironic that the world’s privately operated credit rating agencies, so recently blamed for misleading the world into AAA rated MBOs, insolvent CDRs and the like will apparently be the global arbiters of sovereign credibility?

    That Germany’s Feri, faced on the one hand with the onerous burden of propping up the Euro’s soft underbelly and on the other with an unanticipated post-March 11 mandate to abandon nuclear power, sees risk side growth can’t be that surprising.

    The horrible downside problem with a short position at the sovereign level is that some if not all that liquidation turns out to be innovation in another guise – “to know and not to act is not to know,” and capital diversion into extremely profitable segments is a consummation most investors ultimately desire.

Leave a Comment