US debt-ceiling: Chinese agency first to downgrade US credit rating, after Fitch warning
- Move by China Chengxin International Credit Rating points to US inflation and ‘intensification of political divisions’ in debt-ceiling stand-off
- Sovereign rating declines can raise short-term borrowing costs for taxpayers, but move by Chinese agency seen as mostly symbolic, reflecting domestic market worries
China Chengxin International Credit Rating (CCXI), in which US ratings giant Moody’s holds a minority stake, downgraded it by one notch to AAg+ from AAAg, citing high inflation and the widely watched debt-ceiling stand-off.
“The intensification of political divisions between the two parties in the United States has increased the difficulty of resolving the debt-ceiling issue,” CCXI said in an online statement.
It added that the political wrangling was likely to result in a delayed payment by the so-called X-date – the day the US government says it can no longer fulfil all its financial obligations
“Deterioration in fiscal strength and frequent breaches of the debt ceiling continue to erode the credit base of the US dollar,” it added.
This is the first time a Chinese institution has explicitly expressed worries on the US debt issues, but there has been no official response from Beijing, which slashed its holding of US Treasury bills by a total of US$143.9 billion, or 14.2 per cent, in the past year up to March.