Sun Life's CIO Says US Ratings Threat Is Not Immediate

Despite a predicted deficit of $1.6 trillion this year, Steve Peacher says policy makers in the US have sufficient time to deal with the triple-A rate cut issue.

(February 10, 2010) – Steve Peacher, chief investment officer at Sun Life Financial Inc. (SLF), dismissed the possibility of a downgrade to the US government’s triple-A credit rating in the intermediate term, according to the Wall Street Journal.


Last week, Moody’s Investors Service projected that without a reduction in its federal budget deficit or a rebounding economy, the US could face a ratings cut of its treasury bonds, losing its triple-A status. The credit ratings agency warned that if the US were to grow at a slower rate than expected, borrowing costs in the US would increase, damaging the broader economy.


“Policy makers in the US have extensive time to deal with this issue but they need to deal with it,” said Peacher to the WSJ, indicating that a downgrade is not an “immediate threat.”


Treasury Secretary Timothy Geithner offered a more blunt response, saying that the loss of America’s triple-A bond rating will “never happen.” “When people were most worried about the stability of the world, they still found safety in the Treasuries and the dollar,” he said in an interview with ABC News’s “This Week.” He also indicated that, for the short-term, the top priority for America’s financial policy is to stimulate the economy enough to get it growing again.


The report from Moody’s Investors Service followed President Barack Obama’s unveiling of the 2010 budget and deficit forecast.