The US Credit Rating Is Down By &Nbsp; Dagong International Says China'S Holding Of US Debt Will Depreciate.

August 5th standards

Guan Jianzhong, chairman of Dagong international credit rating Co., Ltd. told China Securities Journal reporter that at present, the solvency and economic fundamentals of the United States are not optimistic, and the US government has yet to find a fundamental solution to the economic problems, which is why the S & P has downgrade the US debt rating in the near future.

He predicted that the impact of the US debt rating downgrade on the future financial market is enormous and long-term.

Moodie Fitch will not adjust rating

S & P downgraded the US

Guan Jianzhong: S & P's reduction of the sovereign credit rating of the United States is a forced choice under a specific and complicated background.

The reasons include: first, in April 18th this year, S & P announced that the US rating outlook would be "negative" and said that if the US government could not cut the deficit size of $4 trillion in 10 years, S & P would lower its rating.

In the parliament's resolution on fiscal deficit, the scale of the US deficit reduction in the past 10 years is only $2 trillion and 100 billion, which is far from the S & P's position. Therefore, S & P must respond to this.

Second, the real debt repayment ability of the United States is decreasing year by year.

Through this long and prolonged negotiation of the US debt ceiling, the whole world is well aware of this.

Without such a large-scale and prolonged debate on the US debt issue and the fierce struggle between the two parties, many problems in the US may not be concerned.

It is precisely because of this path that the real debt situation of the United States has been exposed more clearly and the exposure of US debt has also been increasing. This is a great pressure on the S & P.

Therefore, it is difficult for the S & P to make the final decision, but it has to be done.

However, we can not think that the S & P will fundamentally reform its position, rating ideology and rating system.

After the S & P's downgrade, will Moodie and Fitch also make corresponding adjustments to the US sovereign credit rating?

Guan Jianzhong: I don't think so. Especially after the S & P has just made a statement, Moodie and Fitch will not immediately make a rating adjustment.

Because in many other countries and economies, there will be inconsistencies in ratings between the three countries.

Another reason is that for a very special debt economy like the United States, its debt paying ability rating has always been a global concern.

It is for this reason that S & P made a small rating this time.

China holds US debt and fears depreciation

What risks will the adjustment of S & P to the us bring to the financial market?

What's the impact on China's holding of US Treasury bonds?

Guan Jianzhong: in fact, Dagong's downgrading of the United States last week has caused a big response in the market.

So I think the downgrade of the S & P, the financial market will go through a big fluctuation, and it is not too short to estimate its duration.

There is no doubt about the existence of unsafe factors in China's holding of US Treasury bonds.

This is especially true through the US debt ceiling crisis.

The reaction of Dagong and S & P to the true information of US debt solvency should cause a big fluctuation in the US Treasury bond market, which is mainly reflected in the decline in trading prices and the rise in yields.

In this way, China's holdings of US Treasury bonds will depreciate, and this is also the risk and cost that China must face in its external investment.

What is the actual solvency and economic fundamentals of the United States?

Guan Jianzhong: the US economy is not optimistic now.

Because by discussing the US government's debt ceiling, the US government can fully see the American government's ability to govern, and the United States has not fundamentally recognized the problem of the US economy.

I think the three aspects of the economic problems are what the United States needs to solve: first, the United States needs to fundamentally adjust the way of economic growth, that is, the past long term path to maintain a prosperity through credit overdraft has been unable to maintain. The United States has exhausted its credit resources, so the economic growth is weak. Inevitably, the United States needs to adjust its global strategy to reduce its fiscal expenditure to support its global strategy; and the third is to substantially reduce the welfare level of the people, because the US government has been unable to bear the burden of the.