S&P Upgrade Aside, It May Take Another 7 Years For U.S. To Regain AAA Rating

It may take another seven years for the United States to regain its AAA credit rating.

Standard & Poor’s said Monday that, despite revising its outlook for U.S. credit from Negative to Stable earlier that day, it took both Finland and Canada nine years to return to the outstanding AAA.

The U.S. was downgraded to AA+ with a negative outlook from AAA in August 2011.

“There has been no country yet that has done that in less than 9 years,” Nikola Swann, the director of sovereign ratings, said in a webcast press conference on Monday morning. He said Denmark holds the record for taking the longest to re-burnish its credit ratings: 18 years.

Swann said the U.S. credit rating has a risk of falling back into a negative outlook that is equal to the chance that it will be upgraded.

“The risk to the rating on the upside and downside are balanced,” he said. “[An upgrade] would take a maturely better performance on the fiscal side than what we’re projecting.”

The likelihood of a downgrade was less than one-third,” said John Chambers, the chairman of the sovereign ratings committee. But the credit rating hangs in the balance as partisan gridlock continues to strangle debt-ceiling talks and fiscal agreement in Washington, D.C.

“A certain amount of brinksmanship in Washington is likely to continue,” Swann said. “But we don’t expect there to be a dramatic deterioration in that.”

But, when it announced the country’s revised outlook early on Monday morning, the rating agency said that “the ability of elected officials to address the country’s medium-term fiscal challenges has decreased in the past two decades,” but there have been “tentative improvements” and the U.S. government remains “generally strong.”