Moody's cuts US rating to Aa1

Moody’s Ratings cut the United States’ long-term issuer and senior unsecured ratings to Aa1 from Aaa on May 16, 2025, ending the country’s last top-tier sovereign credit rating from a major agency. The ratings firm changed its outlook to stable from negative and said the downgrade reflected years of rising federal debt and interest costs. U.S. Treasury yields rose in the market reaction, with the 10-year note reaching 4.631% intraday before easing to about 4.573%, according to Reuters market reporting and market data summaries. The move put Moody’s in line with other major rating agencies that had already stripped the United States of a top rating. ### When did Moody’s make the move, and what exactly changed? Moody’s said on May 16, 2025 that it downgraded the U.S. government’s long-term issuer and senior unsecured ratings by one notch to Aa1 from Aaa. The firm also revised the outlook to stable from negative, according to its published rating action. Reuters reported that Moody’s had been the last of the three major credit rating agencies to keep the United States at the highest rating. (moodys.com) S&P cut the U.S. sovereign rating in 2011, and Fitch followed in 2023, leaving Moody’s as the final holdout until this action. ### What reasons did Moody’s give for cutting the U.S.? (moodys.com) Moody’s said the downgrade reflected an increase over more than a decade in government debt and interest-payment ratios to levels “significantly higher than similarly rated sovereigns.” The firm said successive U.S. administrations and Congress had failed to agree on measures that would reverse large annual fiscal deficits and rising interest costs. (investing.com) Moody’s also said the stable outlook reflected what it called balanced credit risks at Aa1. It said the United States retains exceptional credit strengths, including the size and resilience of its economy and the continued role of the dollar and Treasury market in global finance, while adding that those strengths no longer fully offset the deterioration in fiscal metrics. (moodys.com) ### What did markets do after the downgrade? U.S. Treasury yields rose after the downgrade as investors focused on the federal debt load and broader fiscal policy debate. Reuters market coverage said the 10-year Treasury yield climbed as high as 4.631% on Monday before later easing to around 4.573%. (moodys.com) Reuters also reported that longer-dated Treasury yields gained while the dollar weakened against major peers. Investors were also watching a tax-cut bill and wider concerns about U.S. borrowing needs, according to the same report. ### Did the downgrade say the U.S. is at risk of missing payments? (investing.com) Moody’s said the risk of acute funding stress remains low because of enduring investor demand for U.S. Treasuries and the central role of the dollar in the global financial system. The downgrade was a credit-rating change, not a statement that the United States was near default. (investing.com) Treasury market documents also continue to frame U.S. borrowing as a regular financing process. The Treasury Department’s quarterly refunding page lists scheduled borrowing updates and auction documents, including the next refunding-related release on August 3, 2026. ### What comes next after the rating cut? (investing.com) Moody’s set a May 20, 2025 webcast to discuss the U.S. rating action and its change to a stable outlook. The event page identifies the session as an update following the downgrade to Aa1. The Treasury Department’s next formal financing milestone is August 3, 2026, when it is scheduled to release its next quarterly refunding financing estimates. (home.treasury.gov) Investors will also continue to watch Treasury auctions, borrowing projections and congressional fiscal negotiations for signs of whether the debt and interest trends cited by Moody’s begin to change. (events.moodys.com)