U.S. debt problem won't cripple S.C., official says

  • Follow Business

COLUMBIA - The decision by one credit rating agency to downgrade the top-notch bond rating for long-term U.S. debt might have little effect on South Carolina, though nothing's certain, Treasurer Curtis Loftis said Monday.

Standard & Poor's might decide to leave South Carolina's rating at AA-plus, the rating it gave the federal government Friday. Or it could decide to downgrade all states, Loftis said.

South Carolina has been rated at the top by the nation's other two main credit-rating agencies, Moody's and Fitch, since at least the 1970s. But it's been a notch lower with S&P since July 2005, according to his office.

South Carolina's blended rate, among the top 15 of states nationwide, still allows it to enjoy the best rates when it borrows money for everything from road projects to school buildings, Loftis said.

"We're in that top tier. We're proud of our rate," he said. It's "an excellent position for a small Southern state to be in. Our balanced budget provision means a great deal to us, and it keeps us on the straight and narrow."

As of Nov. 1, just eight states had AAA scores across the big three rating agencies, according to a report prepared by the treasurer's office.

Even if S&P downgraded South Carolina by another notch, while Moody's and Fitch kept it at AAA, the impact could be negligible, Loftis said.

"But to be frank, you hear a lot of opinions about this, but nobody really knows," he said. "I think you're going to have evolving versions about what's going to happen for some time."

S&P officials say they will indicate shortly how local and state governments will be affected by their decision to lower the long-term U.S. debt. On Friday, the agency said it downgraded U.S. debt for the first time in history because the credit rating agency lacks confidence that political leaders will make the choices needed to avert a long-term fiscal crisis.

In a July report on outcomes to the debt ceiling crisis, S&P suggested the best of three possible scenarios for state governments and other public finance entities would be for Congress to raise the ceiling without making drastic cuts.

"While this outcome would raise borrowing costs for the federal government, it could be a mostly benign outcome for the public finance sector and likely the least disruptive scenario," it read.

Last month, in the midst of political gridlock on raising the federal debt ceiling, Moody's threatened to downgrade the AAA rankings of South Carolina and four other states, saying they're most vulnerable for their reliance on federal money. Moody's reaffirmed the gold-plated rating for all of them last week, though with a negative outlook, saying the federal pact dealt with the immediate threat of a default.

Comments (1)

Add comment
ADVISORY: Users are solely responsible for opinions they post here and for following agreed-upon rules of civility. Posts and comments do not reflect the views of this site. Posts and comments are automatically checked for inappropriate language, but readers might find some comments offensive or inaccurate. If you believe a comment violates our rules, click the "Flag as offensive" link below the comment.
eagle
94
Points
eagle 08/09/11 - 12:39 am
0
0

How about if someone at a/c

Unpublished

How about if someone at a/c learns to spell.

REDRIDER
134
Points
REDRIDER 08/09/11 - 09:09 am
0
0

S&P needs to move Afghanistan

S&P needs to move Afghanistan or Pakistan to hide. People are sick of tyranny. They will not bring this Great Nation down. I blame both Parties for this. Dragging out a debt resolution should not drop a credit rating. It is all of our problems now. Job growth, Lower gas prices, Balanced the budget, We are at OPEC's mercy. Drill Hear Drill now! Make things here in America. Buy American. And YES FARE TAX FOR ALL!

Back to Top

Top headlines

New chair gets vet off-road to fish

Army veteran Henry Kent's new Action Trackchair has attachments for fishing, with a holder for his fishing pole and a built-in tackle box, but others can be outfitted with gunracks for hunting.
Loading...