{"id":53131,"date":"2013-04-23T09:04:31","date_gmt":"2013-04-23T09:04:31","guid":{"rendered":"https:\/\/armbanks.am\/2013\/04\/23\/238275\/"},"modified":"2024-12-15T13:04:14","modified_gmt":"2024-12-15T13:04:14","slug":"bloomberg-fitch-downgrades-britain-no-one-cares","status":"publish","type":"post","link":"https:\/\/armbanks.am\/en\/2013\/04\/23\/53131\/","title":{"rendered":"Bloomberg: Fitch downgrades Britain. no one cares"},"content":{"rendered":"

YEREVAN, April 23. \/ARKA\/.<\/strong> Fitch Ratings announced Friday that it is cutting the U.K.\u2019s credit rating from AAA to AA+, the second-highest level, because of its weak economic performance and high public debt. This follows a similar move by Moody\u2019s in February, and it doesn\u2019t matter.<\/p>\n

As Svenja O\u2019Donnell and Scott Hamilton note in reporting on the downgrade for Bloomberg, \u201cInvestors often ignore such moves,\u201d and U.K. sovereign bond yields fell after the Moody\u2019s downgrade. Investors were similarly blase Friday: Credit-default swap prices for the U.K. have barely moved. As of 2:05 p.m. in New York, U.K. five-year CDS were trading at $47.01, up all of 11 cents. (That\u2019s a price to insure $10,000 in bonds against five years of losses.)<\/p>\n

That means that, despite the warnings from Fitch and Moody\u2019s, investors still consider U.K. bonds to be less risky than they were in February and far less risky than they were last summer, when all three rating agencies were giving the country their top rating (see chart).<\/p>\n

The U.K. government is not some regional water district. Rating agencies aren\u2019t telling investors anything they don\u2019t already know when they report that the U.K. has high debts and weak growth. Investors have (properly) judged that U.K. bonds are extremely low-risk instruments despite those troubles, and it\u2019s no surprise the Fitch announcement hasn\u2019t changed their minds.<\/p>\n

That won\u2019t stop opponents of the U.K. coalition government\u2019s austerity policies from saying that today\u2019s action proves them right — any more than it stopped advocates of austerity in the U.S. from claiming vindication after the Standard & Poor\u2019s downgrade on this side of the Atlantic. But now, as then, the rating doesn\u2019t matter. \u20130–<\/p>\n","protected":false},"excerpt":{"rendered":"

Fitch Ratings announced Friday that it is cutting the U.K.\u2019s credit rating from AAA to AA+, the second-highest level, because of its weak economic performance and high public debt<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","tstyn_error":""},"categories":[12139,9216],"tags":[13385,12172,15389,315],"class_list":{"0":"post-53131","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-economy-en","7":"category-news","8":"tag-britain","9":"tag-economy-en","10":"tag-fitch-ratings-2","11":"tag-315"},"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts\/53131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/comments?post=53131"}],"version-history":[{"count":0,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts\/53131\/revisions"}],"wp:attachment":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/media?parent=53131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/categories?post=53131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/tags?post=53131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}