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Monday, July 25, 2011

Egan Jones Cuts US Rating, Cites High Debt Load

It's not the debt ceiling, but the Obama administration's unsustainable debt load that has already caused a down-grading of the US credit rating.

From Reuters
Credit rating agency Egan-Jones has cut the United States' top credit ranking, citing concerns over the country's high debt load and the difficulty the government faces in significantly reducing spending.

The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.

Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.

Lawmakers in Washington are seeking to agree on spending cuts before raising the country's debt ceiling, with five days remaining before President Obama's deadline for a deal.

Both Moody's Investors Service and Standard & Poor's, the two largest rating agencies, said last week they may cut the U.S. top rating if a deal to raise the debt ceiling is not reached.

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