Moody's Ratings cuts U.S. credit rating citing budgetary burden

Moody's Ratings on Friday slashed U.S. long-term issuer and senior unsecured ratings to Aa1, down from the highest rating of Aaa, citing rising government debt and interest payment ratios.

The rating firm also changed its outlook for U.S. ratings from negative to stable.

"This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," said a release by Moody's Ratings.

Moody's Ratings changed the outlook of U.S. sovereign rating from stable to negative in November 2023.

According to the Moody's release, "Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs."

"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat," the release read.

In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher, said Moody's Ratings.

U.S. fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns, according to the credit rating agency.

The downgrade on Friday means the United States has lost its last triple-A credit rating from a major rating firm, following cuts by Fitch Ratings in 2023 and Standard and Poor's Global Ratings in 2011.

Moody's Ratings also forecasted a bleak outlook for the outlook of U.S. debt burden and fiscal conditions in the coming decade.

Without adjustments to taxation and spending, the United States is expected to continue to have limited budget flexibility, with mandatory spending, including interest expense, to rise to around 78 percent of total spending by 2035 from about 73 percent in 2024.

If the 2017 Tax Cuts and Jobs Act is extended, it will add around 4 trillion U.S. dollars to the federal fiscal primary (excluding interest payments) deficit over the next decade, according to Moody's Ratings.

Moody's Ratings anticipated that U.S. federal debt burden would rise to about 134 percent of GDP by 2035, compared to 98 percent in 2024.

Despite high demand for U.S. Treasury assets, higher Treasury yields since 2021 have contributed to a decline in debt affordability, warned Moody's Ratings.

Federal interest payments are likely to absorb around 30 percent of revenue by 2035, up from about 18 percent in 2024 and 9 percent in 2021, said Moody's Ratings.

"Moody's downgrade of the United States' credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway," U.S. Senate Democratic Leader Chuck Schumer said in a statement on Friday.

Moody's Ratings cuts U.S. credit rating citing budgetary burden

Moody's Ratings cuts U.S. credit rating citing budgetary burden

Moody's Ratings cuts U.S. credit rating citing budgetary burden

Moody's Ratings cuts U.S. credit rating citing budgetary burden

The three astronauts of China's recently-returned Shenzhou-20 mission on Friday shared the experiences of their dramatic 204-day space mission, including detailing the emergency procedures which were implemented to bring them safely home after their return capsule was struck by space debris.

The trio -- Chen Dong, Chen Zhongrui, and Wang Jie -- met with the press in Beijing on Friday afternoon, marking their first public appearance since returning to Earth in November.

When detailing the emergency response mechanisms which were enacted prior to their scheduled return, the astronauts explained that upon discovering a triangular crack on the spacecraft's viewport window, they immediately took photos for documentation and transmitted them to the ground team, who swiftly activated an emergency plan to get the trio home safely.

Experienced mission commander Chen Dong explained how the crew had complete faith in their colleagues on the ground to find a solution to these unforeseen circumstances which led to their return being delayed.

"First, we must trust the ground team, who would anticipate everything and develop the safest return plan for us. Second, we must believe in ourselves; as well-trained astronauts, we have the ability to manage various unexpected failures. I believe that with the collaboration of astronauts and researchers on the ground, our space home will surely go farther, more steadily, and for a longer time," he said.

Following their extended stay in space as a result of the debris incident, the Shenzhou-20 crew spent a total 204 days in orbit, setting a new record for the longest duration by a single group of Chinese astronauts.

During their mission, they completed multiple payload operations, conducted extensive scientific experiments, and carried out four extravehicular activities.

"Our crew worked together with the ground team in unity and coordination, completing four extravehicular activities, several payload entry and exit tasks, and a large number of scientific experiments. It was a fulfilling yet challenging mission. The path to exploring the heavens is long and arduous, but I firmly believe that China's space missions will succeed," said Chen Zhongrui, a former air force pilot who was making his first spaceflight during the mission.

"From the ground to space, from learning to application, I have deeply felt the solid progress of Chinese space endeavors and the quiet dedication of countless personnel behind the scenes. In the future, I will accomplish each mission with full commitment, living up to the trust of the motherland and the people," said fellow astronaut Wang Jie, who was also making his debut spaceflight.

After returning to Earth on Nov 14, the trio successfully completed their isolation recovery and rehabilitation and will now resume normal training following health assessments.

The crew's return, originally scheduled for Nov 5, was postponed due to safety concerns, with the astronauts later using the return capsule belonging to their successor crew of the Shenzhou-21 mission to get back to Earth. China later launched the unmanned Shenzhou-22 spacecraft which will serve the future return of the crew now aboard the Tiangong Space Station.

Shenzhou-20 astronauts share experiences after safely returning from debris incident