–BY Issah Olegor
For the first time in years, the United States no longer holds a triple-A credit rating from any major global rating agency. On May 16, 2025, Moody’s Investors Service downgraded the US sovereign credit rating from its highest tier, triple-A, to ‘Aa1,’ citing a steady increase in government debt and rising interest costs over more than a decade as key reasons.
This downgrade marks a significant moment in US financial history, highlighting long-standing fiscal challenges that successive administrations have struggled to address.
The triple-A rating, which denotes a country’s top creditworthiness and strongest capacity to meet debt obligations, has been gradually slipping away from the US in recent years.
Fitch Ratings downgraded the US in 2023, while S&P Global Ratings had already cut the rating back in 2011, leaving Moody’s as the last major agency to maintain the prestigious status until now.
Moody’s statement emphasized that the downgrade reflects the persistent increase in the US government’s debt burden relative to its peers.
Specifically, it noted that debt and interest payments have risen to levels significantly higher than those seen in other countries with comparable ratings.
This rising debt profile raises the risk of default and means the US could face increased borrowing costs moving forward.
Despite the downgrade, Moody’s acknowledged the US retains considerable credit strengths, including the size and resilience of its economy, its dynamism, and the continued dominant role of the US dollar as the world’s primary reserve currency.
These factors still underpin the country’s financial credibility, although the downgrade signals heightened caution among investors and creditors.
The downgrade has broad implications for international financial markets and the US economy.
A lower credit rating can increase the cost of borrowing for the US government, potentially impacting interest rates globally and influencing fiscal policy decisions at home. It also serves as a stark reminder of the need for long-term fiscal reforms to manage the country’s debt trajectory.
Moody’s decision follows warnings issued in 2023 when it flagged the risk of losing the triple-A rating due to unsustainable fiscal trends.
The US Department of Treasury has yet to comment on the latest downgrade.
