Moody's Lowers Washington DC Rating Outlook to Negative Following the Downgrade of US Credit Outlook


After Moody's downgraded its outlook on U.S. sovereign debt from "stable" to "negative" on the 10th, the credit rating agency Moody's downgraded its outlook on the U.S. capital, Washington, D.C., from "stable" to "negative" on the 13th.

Moody's also said it is unlikely to upgrade Washington, D.C.'s credit rating in the next 12 to 18 months and may consider further downgrades.

On the 10th, Moody's downgraded the outlook for U.S. sovereign debt on the grounds of widening fiscal deficits and political polarization in Congress. If the U.S. Congress fails to reach a consensus on a short-term spending bill, the U.S. federal government will be forced to shut down on the 18th.

In response, U.S. Deputy Treasury Secretary Wally Adeyemo noted that while Moody's maintained its AAA sovereign rating on the U.S., it did not endorse the negative outlook. White House press secretary Karine Jean-Pierre attributed the change in outlook to the behavior of the Chinese Communists in Congress, arguing that Moody's decision to change the U.S. outlook was yet another consequence of Republican extremism and dysfunction in Congress.

Bloomberg reported on the 7th that annualized interest payments on U.S. government debt are expected to top the $1 trillion mark by the end of October, more than double what it was 19 months ago.

As early as August, Fitch Ratings downgraded the default rating of U.S. long-term foreign currency issuers from AAA to AA+, and the political "tug-of-war" around the debt ceiling was also the reason why S&P Global Ratings downgraded the U.S. sovereign credit rating in 2011.