Subject: Standard & Poor’s Puts ‘Negative’ Outlook on U.S. AAA
From: "Michael Andrews" <[email-masked]>
To: "Thad Brown" <[email-masked]>, "Ronnie Mainieri" <[email-masked]>, "Curt Hastings" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Chris Heinz" <[email-masked]>
Date: Mon, 18 Apr 2011 10:14:21 -0400

Standard & Poor’s Puts ‘Negative’ Outlook on U.S. AAA (1)
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By Robert Burgess

April 18 (Bloomberg) -- Standard & Poor’s put a “negative” outlook on  
the U.S. AAA credit rating, citing rising budget deficits and debt.

“We believe there is a material risk that U.S. policy makers might not  
reach an agreement on how to address medium-and long-term budgetary  
challenges by 2013,” New York-based S&P said in a report today. “If an  
agreement is not reached and meaningful implementation does not begin  
by then, this would in our view render the U.S. fiscal profile  
meaningfully weaker than that of peer ‘AAA’ sovereigns.”

Under President Barack Obama’s fiscal year 2012 budget, released in  
February, the total debt subject to the ceiling would be $20.8  
trillion in 2016. The plan House Republicans approved April 15,  
written by Budget Committee Chairman Paul Ryan, would need a debt  
ceiling of at least $19.5 trillion, according to data compiled by  
Bloomberg Government.

Treasuries fell, reversing earlier gains, after S&P lowered its  
outlook to negative from stable. The benchmark 10-year note yielded as  
much as 3.45 percent in New York before trading little changed at 3.43  
percent. The dollar dropped 0.7 percent to 82.58 yen and pared its  
gain versus the euro. The S&P 500 Index fell 1.5 percent.

The Treasury Department projected that the government may reach the  
$14.3 trillion debt ceiling limit as soon as mid-May and run out of  
options for avoiding default by early July.

Last week, Moody’s Investors Service said Obama’s plan to cut $4  
trillion in cumulative deficits within 12 years may be a “positive”  
for the nation’s credit quality and mark a reversal in the budget  
debate.

The U.S. is the only large AAA rated country that saw its debt rise  
during the crisis that until recently had no plan that would reverse  
the trend, Steven Hess, senior credit officer at Moody’s, said last week