Resilience of North American Economy Supports U.S. & Canadian Sovereign Credit Ratings

The U.S. credit rating has been in the spotlight in recent months. With Congress delaying passage of a debt ceiling increase until the U.S. Treasury was running very low on cash, we placed our rating of the United States Under Review with Negative implications (URN) on May 25. The passage of the Fiscal Responsibility Act on June 3 enabled the Treasury to increase debt issuance and quickly restore its cash position (from $23 billion on June 2 to $502 billion as of end-July). Just a week ago, we concluded our review and confirmed the U.S. at ‘AAA’ (see DBRS Morningstar Confirms the United States at AAA, Stable Trend).

-- U.S. credit challenges have been in the spotlight in recent months. These challenges could pose a risk to the ratings over the medium term.
-- However, the credit strengths of the U.S. and Canadian sovereigns should not be underestimated.
-- U.S. and Canadian ratings are supported by the massive North American economy, strong political institutions, and favorable prospects for continued prosperity, immigration and economic growth.

“While the U.S. stands out negatively for its fiscal performance over the past two decades and its growing polarization, it also stands out positively in terms of its size, resilience, and capacity to service its debt,” notes Thomas R. Torgerson, Co-Head of Sovereign Ratings. “U.S. credit strengths appear likely to persist for the foreseeable future, and may ultimately become a bigger advantage amid geopolitical uncertainty.”