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Moody’s Downgrades United States to Aa1Source: Moody’s Ratings, as of May 2025. ▸Rationale for downgrade▹Large fiscal deficits which have led to increases in government debt and interestpayment ratios to levels significantly above those of Aaa-rated peers▹High deficit-to-GDP and debt-to-GDP ratios that are expected to rise further due toincreased interest payments on debt, rising entitlement spending, and relatively lownew revenue generation▸Rationale for stable outlook▹Exceptional credit strengths such as the size, resilience and dynamism of itseconomy and the role of the US dollar as the global reserve currency▸The downgrade is generally expected to have a minimal impact on markets▹S&P and Fitch previously downgraded the United States in 2011 and 2023,respectively▹United States has been on credit watch negative by Moody’s since November of2023▹The dollar remains the world’s reserve currency and Treasuries remain highly liquid▹Moody’s also downgraded the U.S. government sponsored enterprises, andseveral banks and insurance companies whose rating was tied to the USgovernmentAaa Aa1United StatesFor the Quarter Ended June 30, 2025Market UpdatePFM Asset Management | pfmam.comCITY OF REDWOOD CITY147.A. - Page 20 of 6330