Ah, now there’s a distinction worth making.
Moody’s, one of the big three debt rating companies, is continuing to rate the sovereign debt of deeply indebted countries such as the United Kingdom and the United States Aaa. That’s the same top credit rating Moody’s gives to countries such as Canada and Germany where debt loads are at lower levels and budgets are closer to balanced.
But, Moody’s is calling the former group “resilient” and the latter “resistant.”
No country in either group, Moody’s says, is “vulnerable.
The debt load for the United States will climb to 97.5% of GDP in 2010 from 87.4% this year, according to the Organization for Economic Development. For the United Kingdom the debt load is projected to climb to 89.3% from 75.3% in 2009.
“Resistant” countries, a category that also includes New Zealand and Switzerland, won’t see their debt rise to levels that threaten their Aaa status.
“Resilient” countries are Aaa countries where public finances are deteriorating, but which display, in Moody’s opinion, “an adequate reaction capacity to rise to the challenge and rebound.”
Not everyone buys this distinction.
The credit default swaps market, where traders can buy insurance against default, has a different opinion. The cost of protecting against default by the United Kingdom, a resilient country, is equal to that cost of insuring against default by Portugal. Moody’s rates Portugal Aa2. That’s two steps below Moody’s Aaa rating for the United Kingdom.