As Donald Trump’s “big, beautiful” tax bill heads to the US Senate, investors everywhere are growing increasingly uneasy. On May 16, the credit-rating agency Moody’s downgraded US sovereign debt from its long-held triple-A status to Aa1 – following similar decisions by Standard & Poor’s (in 2011) and Fitch Ratings (2023). Given the sheer volume of US debt – which now stands at $36 trillion, or 124% of GDP – and rising interest costs, these institutions have concluded that US debt metrics are no longer in line with those of similarly rated sovereigns.That means America is no longer part of the elite group of ultra-safe borrowers: countries like Germany, Switzerland, and Singapore. Instead, it has been demoted to the second tier, alongside Austria and Finland. Members of this group remain highly creditworthy, with minimal risk of default; but they are not as bulletproof as the top-rated countries.
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