Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly-rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the United States of America (AA/Stable; S-1+/Stable) on 4 February 2021, incorporating the update from the sovereign methodology. The review resulted in no action on the assigned ratings. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

The United States’ AA rating reflects the country’s wealthy, competitive and diversified economy, its transparent and accountable institutional framework, as well as the US dollar’s unparalleled global reserve currency status, which enables the country to run fiscal and current account deficits with limited debt sustainability concerns. The rating is constrained by i) a modest potential growth outlook, ii) the high and rising level of government debt given the previous administration’s pro-cyclical fiscal policies, the sizeable, albeit appropriate, fiscal stimulus to address the Covid-19 shock, and iii) the sovereign’s significant contingent liabilities from pension and healthcare-related obligations. Following presidential elections in November 2020 and later Democratic victories in the two run-off Senate seats in the state of Georgia, President Joseph Biden will enjoy a slim majority in the House of Representatives as well as in the Senate. This should, however, provide him with greater political capacity to pursue his immediate priority of strengthening the administration’s response to the pandemic and its economic consequences. Still, the divisions between the political parties and the lack of bipartisan collaboration are likely to continue hindering the effective implementation of policies to address the country’s underlying structural economic and social challenges.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Alvise Lennkh, Executive Director.

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