Monday, July 25, 2011

Pimco: US Risks to lose its AAA Credit Rating

US President Barack Obama has asked for a $2.4 trillion borrowing boost in the $14.3 trillion debt ceiling. House Speaker John Boehner encouraged the Republicans to unite their efforts in order not to let Obama obtain the money at once without any guarantees of spending cuts.


Mohamed A. El-Erian, the head of Pacific Investment Management Co, the world’s largest manager of bond funds, believes that the United States may lose its top AAA credit rating even if US Congress agrees to lift up the debt ceiling.


The specialist notes that the nation already suffers from weak economic growth and high unemployment and the debates over the debt limit make the problems intensify.


Standard & Poor’s estimates the possibility of US rating cut within 3 months by 50%.

Yields on benchmark 10-year rose to 2.96% on July 22 but remain below the 5-year average of 3.71%

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