The relegation of US rating can have severe implications on Romanians who invest in the region
The Moody's rating agency has relegated the long -term Sovereign Credit rating from the United States to AA1 and changed the perspective from “negative” to “stable”, for the first time in 1917, say analysts, warning that this can have implications on Romanian investors.
Moody's withdrew the maximum rating awarded US for the first time in 1917. Photo shutterstock
The rating agency invoked the rapid growth of debt, an annual budget deficit that could increase the political impasse regarding taxes and expenses.
“The measure could cause some fluctuations on the market, but for many participants in the stock market, this was already anticipated ”considers the analyst Etoro Bogdan Maioreanu, recalling that the US has maintained their AAA rating for over a century, reflecting its status as the most stable and solvable economy in the world.
“However, Moody's, the last of the big rating agencies “Big Tree” that still granted the US a maximum credit rating – triple A – carefully analyzed the federal government, stating that successive presidential administrations and the Congress failed to find measures to reverse annual tax deficits and increase interest costs “points out the analyst.
Moody's warned that the US budget deficit, which is currently approaching $ 2 trillion per year or over 6% of GDP, could increase even more, to almost 9% by 2035. “It is for the first time that all three major international rating agencies – Moody's Ratings, S&P Global Ratings and Fitch Ratings – have given the United States a rating below the maximum level”, Says Bogdan Maioreanu.
In 2011, the S&P retrograde was triggered by the political impasse on the debt ceiling and the fiscal policy, which aroused concerns about the government's ability to manage their finances responsibly. The Retrograde Fitch from 2023 reflected the continuous fiscal pressures and the increase of the debt level. The relegation of Moody's from 2025 is the highlight of a ten -year tendency to increase the deficit, political polarization and the failure of implementing effective tax reforms.
In its analysis, Moody's reports the deficits related to the extension of the tax reductions that have not yet been adopted by the American legislature, while ignoring the customs tariffs, which operates as a consumer fee of $ 2 trillion, supporting the income. rating.
35% of Romanians who invest in stock market shares can be affected
What happens on the US market also affects 35% of Romanian individual investors who have exposure in this geographical region, according to the latest Etoro Retail Investor Beat. But 50% of Romanian investors are exposed to the Romanian Stock Exchange. Romanian politicians should carefully analyze the reasons why the US long -term debt was relegated and understand that a very high budget deficit is something that rating agencies will sanction sooner or later. Although the relegation reaction is still moderate on the American markets, the Romanian economy is not as stable as the exchange of the exchange rate and the movements of the stock market have recently shown. Romania has the credit rating BBB- and BAA3, with a negative perspective, this being the last step above the “junk” level at which the investments are no longer recommended. After the presidential elections, the new Government will have to perform a serious and difficult task to maintain the investment rating of Romania, without which the country loses access to reasonable interest.
The moody downgrade of American long-term debt could worry investors, but reflect what markets already know: the United States is in a new fiscal regime defined by austerity through customs and ceilings, not by incentives. A 27 -year era of fiscal incentives ended in 2023, and net interest payments discreetly increased up to 18% of tax revenues, far above historical norms. However, balancing the budget deficit could be a more difficult task for the US government than the statements in Trump's campaign would have suggested. Investors should follow the treasury yields and tax negotiations, keep their calm and apply their investment plans.
