Dagong puts the US on Negative Watch List

Updated: 2012-12-25 20:25

(chinadaily.com.cn)

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Dagong Global Credit Rating Co on Tuesday put the United States on its Negative Watch List, citing the pending fiscal cliff issue and expanding debt scale of the country.

During the debt ceiling crisis in August 2011, Dagong took the lead in downgrading the local and foreign currency sovereign credit ratings of the US from A+ to A, both with a negative outlook.

"We have decided to put the US on Negative Watch List because political conflict has again pushed the credit rating of the federal government to the cliff," Dagong said in a statement.

The government lacks the willingness and measures to make debt repayments, it said, and the easing measures adopted in the last two years have led to long-term depreciation of existing debt, and losses to its creditors.

The debt burden for the US federal government has risen by 11.7 percent in 2012, far more than the GDP growth during the same period of 3.4 percent and fiscal revenue of 6.2 percent. The debt balance will rise to 104.8 percent of its GDP by the end of this year.

Dagong said the US economy may fall into a recession in 2013 and will remain sluggish in the long term, further dampening its debt repayment ability.

Raising its debt scale and monetizing the debt have become long-term policies for the US, and the country's debt repayment ability declined, Dagong said.

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