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UPDATE 1-S&P sees cut in U.S. AAA rating unlikely near-term

Wed Jun 17, 2009 10:04pm IST
 
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By Caryn Trokie

NEW YORK, June 17 (Reuters) - Standard & Poor's Ratings Service said on Wednesday it is unlikely to change its AAA credit rating for the United States in the "near term."

Financial markets became anxious about the United States maintaining its prized top rating after S&P warned last month that Britain's own AAA credit grade was coming under increasing pressure amid a global financial crisis and heavy government intervention.

Since S&P's warning on the UK, several top investors have said they expected the United States would lose its AAA rating.

But S&P on Wednesday said America's credit outlook remains solid despite rising fiscal deficits, allowing it to maintain its top-notch rating status.

"Despite significant weakening in the near-term economic outlook, projected fiscal deficits, and the high fiscal costs of government support of the U.S. financial sector, we still believe that the U.S. government's credit strengths continue to outweigh its weaknesses," said Nikola Swann, an S&P analyst.

The rating agency cited the U.S. dollar's reserve status and the U.S. economy's openness to trade as supporting the AAA rating, which has traditionally given U.S. Treasury bonds the status of a safe-haven investment.

S&P said it will continue to monitor the country's economic and fiscal outlook.  Continued...

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