How to read a rating downgrade

Ted Scott, Director of Global Strategy at F&C, advises taking a step back to consider what has actually changed and whether the sharp decline in risk assets represents “a buying opportunity or is the beginning of a more pernicious move.” Against the current backdrop of heavy falls in share prices, Scott says the rating downgrading of US government debt from AAA to AA+ was not totally unexpected. S&P had already threatened a downgrade if the US did not raise its debt ceiling enough to present a credible fiscal consolidation plan to address the huge public sector deficit. However, th...