Moody's downgrades U.S. credit rating, pushes it out of elite 'AAA' club citing rising debt

"May 16 (Reuters) - Moody's on Friday downgraded its credit rating of the United States by a notch to 'Aa1' from 'Aaa', citing rising debt and interest 'that are significantly higher than similarly rated sovereigns'. 'Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,' Moody's said.

Moody's was the last among major ratings agencies to keep a top, triple-A rating for U.S. sovereign debt, though it had [lowered its outlook in late 2023](https://www.reuters.com/markets/us/moodys-changes-outlook-united-states-ratings-negative-2023-11-10/) due to wider fiscal deficit and higher interest payments."

[https://www.reuters.com/markets/us/moodys-downgrades-us-aa1-rating-2025-05-16/](https://www.reuters.com/markets/us/moodys-downgrades-us-aa1-rating-2025-05-16/)

How does this affect the most credit-hungry industries? Less investors putting money down in the U.S. from across the waters and higher rates of loan application rejections will make it more difficult for operations that finance heavily through debt. Large utilities providers in the US rely on low interest rates to make their money, but a lower credit rating only incentivizes federal reserve officials to seek higher rates to prevent capital flight out of government bonds, so these utilities will look to secure their financial stability by passing the cost onto their massive customer bases. Expect businesses with less influence from liabilities to exploit this shift in price in an attempt at saving themselves from the fire lit under them as well, but so many debt-heavy small businesses are going to be hammered by this.