S&P upgrades US outlook from negative to stable

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Ratings agency Standard & Poor’s has upgraded its outlook for the US, suggesting that the near-term likelihood of another downgrade is less than one-in-three.

S&P became the first credit rating agency to downgrade the US’ sovereign credit rating in August 2011, when it cut the rating from AAA to AA+. The country has been on a negative outlook since.

However, the group has just upgraded the country from ‘negative’ to ‘stable’, while reaffirming its sovereign rating at AA+.

In a new appraisal of the US, the ratings agency says the upgrade is due to the country’s improved tax receipts and moves to address long-term budgetary problems, but highlights the political brinkmanship seen in recent budget negotiations.

S&P says: “We believe that our current AA+ rating already factors in a lesser ability of US elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling.”

The US is still rated at AAA by Moody’s Investors Service and Fitch Ratings.