The United States has lost its AAA credit rating, at least according to Standard & Poor’s (S&P). The ratings agency downgraded the U.S. Friday after the market close for the first time ever, and issued a negative outlook – meaning the likelihood of another downgrade in the future has risen.
In its report, S&P stated the following:
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
S&P also had some critical comments of America’s policymakers:
Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers
Monday should prove to be a rather interesting day in financial markets given the ratings cut, with volatility in numerous asset classes likely to increase further from this past week.
S&P’s downgrade stands in stark contrast to Moody’s and Fitch, who reiterated their AAA ratings of the U.S. earlier this week following the debt ceiling agreement.
The full downgrade report is available here.
Platinum Group Metals Secures $260 Million Loan
An Updated Feasibility Study published for the WBJV Project 1 Platinum Mine in October 2009 planned for a steady state production rate of 275,000 4E ounces (platinum, palladium, rhodium and gold) per year at a capital cost of $443 million. Of the required capital cost, a fully funded Phase 1 $100 million surface establishment and underground decline development program is already in progress. Full Platinum Group Metals News Release.
- The $260 million senior loan includes a term of nine years, an additional working capital facility up to $25 million, and a standby subordinate loan facility for cost overruns, if any.
- The proposal includes a hedging strategy that maximizes the hedging of byproducts such as palladium, gold and nickel - thereby minimizing the ounces of platinum hedged over the loan life.
- The lending group of banks has a global presence, direct platinum industry experience and includes two of South Africa's major banks. Each bank has a defined role in order to assist with efficiency and a timely closing, currently expected by November 30, 2011.
