US, Germany, Britain, France merit Aaa: Moody's

13th January 2011, Comments 0 comments

US, Germany, Britain and France still merit the top "Aaa" credit rating but must fight high debt levels to maintain this, Moody's Investor Service said on Thursday.

Moody's, a leading credit rating agency, said that the four countries would be able to meet debt repayments, given the ratios between borrowing rates and government revenues.

Moody's said there was little change since its last report in August, emphasising that future costs from ageing populations needed to be brought under control to maintain long-term stability.

"The US has recently rolled out a programme of additional stimulus while, in contrast, the UK's coalition government has introduced a strong programme of deficit reduction in order to address the steep increases in government debt as a result of the financial crisis," the report said.

"Germany and France have also recorded significant debt increases, but have on balance moved toward deficit reduction, France less aggressively so than Germany," it said.

"Despite these differing strategies, Moody's continues to believe that all of these countries still possess debt metrics -- including the debt affordability (i.e. the ratio of interest payments to government revenue) -- that are compatible with their Aaa ratings," it said.

The agency also suggested an expansion of the European Financial Stability Facility (EFSF) -- a major issue of debate within the eurozone -- would benefit top-rated nations.

"Some ring-fencing of potential (eurozone sovereign debt) risks would be credit-positive for the top-rated governments...," it said.

"Such ring-fencing would further support these countries' credibility and demonstrate that they are able and willing to deliver without overstretching their own financial fundamentals," the3 report said.

© 2011 AFP

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