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‘US credit downgrade no big impact on investments’
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Posted on Aug 22 2011
NMI Retirement Fund investment consultant Wilshire Associates said yesterday that the recent credit downgrade received by the U.S. has no immediate impact on the CNMI’s market investments.
Wilshire principal Maggie Ralbovsky said the United States’ credit rating remains the highest.
S&P is the first credit agency to topple the United States from its longtime triple-A credit rating perch when it downgraded this to AA+. The rating agency believes the fiscal consolidation plan that the U.S. Congress and White House agreed to falls short of what would be necessary to stabilize the government’s medium-term debt dynamics.
Ralbovsky said yesterday that S&P is just one the three international credit rating agencies—with Fitch Rating and Moody’s as the other two—that provide rating performance.
She explained that if these three rating firms rate an entity differently, “this entity is considered split rated and a split entity is considered having the higher rating.”
“In the near term, no [impact] really,” she said, adding that the United States’ ratings with Moody’s and Fitch remain at AAA.
“In essence, the downgrade is not a concrete decision factor by financial market players,” she said, adding that the downgrade was due to the unclear vision of the U.S. to solve its budget deficit and not because the U.S. Treasury was in fact downgraded.
Yesterday, the Wilshire principal cited several reasons for the continued volatility of the market. Among these is the political uncertainty in the Middle East, the debt crisis in Europe, differing opinions and contrasting views in the U.S. Congress, and others.
She said Wilshire predicts the volatility to remain in the short term.
