June 25, 2020 / 11:08 PM / 18 days ago

Falling AAAngels: The shrinking 'triple A' world

(This June 25 story corrects last time Fitch had 10 ‘triple A’ sovereigns to 1998 from 2003)

By Marc Jones

LONDON (Reuters) - Canada became the latest country to be stripped of a prized ‘triple A’ sovereign credit rating after Fitch downgraded it on Wednesday.

Below is a list of all the countries that still carry at least one triple A grade as well as graphics showing the steady decline of the top rating bracket over the last 15 years.

GRAPHIC: The dwindling triple A world - here

After Wednesday’s downgrade of Canada, Fitch now has the fewest ‘AAAs’ since 1998. It now rates 10 sovereigns ‘AAA’, which, at less than 10% of rated sovereigns, is the smallest ever share of the sovereign portfolio.

From August 2004 until April 2009, there were between 16-19 ‘AAA’ sovereigns, the highest number ever, and the period of greatest ‘AAA’ stability. Historically, 18 sovereigns have had top grades with Fitch, while there were 19 on S&P Global’s list going into the 2008 financial crisis.

Japan was the first sovereign to lose its ‘AAA’ rating, in 1998 from Fitch and 2001 from S&P. Since then, Austria, Finland, France, Ireland, Spain, Britain, in the case of S&P the United States, and now Canada for Fitch have all followed suit.

There have been few recent upgrades into the coveted bracket. The Netherlands got its ‘AAA’ back from S&P in late 2015, Australia also won its ‘AAA’ from Fitch in November 2011 though it had earned it back as early as 2003 from S&P.

Canada, Netherlands, Sweden, Finland, Denmark, Australia have all regained S&P ‘AAA’ ratings after losing them at various points, though no country has even regained one stripped by Fitch.

GRAPHIC: Falling AAAngels S&P - here

GRAPHIC: Falling AAAngels Fitch - here

With the fall in the number of ‘AAA’ sovereigns, their collective shares of global government debt and GDP have declined as well.

Fitch estimated that, at end-2006, prior to the onset of the global financial crisis, ‘AAA’ sovereigns accounted for nearly half of total government debt.

Analysts at ING estimate that it is now below 25% while S&P, which no longer grades the U.S. - the world’s biggest government borrower - as triple A, calculated it to be around 7% last year.

GRAPHIC: Falling share of AAA rated govt debt - here

Additional reporting by Dhara Ranasinghe; Editing by Hugh Lawson

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