View US downgrade in right perspective: S&P's Deven Sharma
10 Aug 2011
Following the storm over the downgrade of US credit rating from AAA to AA+ last week, ratings agency Standard & Poor's president Deven Sharma yesterday hoped the decision would with time come to be seen objectively.
Sharma, an India-born American told Fortune magazine in an interview, that he hoped over time people recognise that the agency was objective and independent and it called risks as it saw them with a forward-looking view.
"It's hard to say how our decision Friday will be taken. You have to look at it in the context of history, five or 10 years from now. If (US political dysfunction) doesn't change, history will say that we made the right risk call," he said.
"When we downgraded Japan it was the second-largest economy and it was coming off so much economic strength. People wondered, what the hell we were talking about. But now Japan has more than 200-per cent debt-to-GDP and the problem there is big," Sharma said.
According to Sharma, the market reaction in the last few days couldn't be attributed to S&P's decision on the US credit rating.
"There are many factors that could be influencing the markets: the debt situation in Europe, the economic slowdown in the US, a slowdown in high-growth markets that could impact US companies with a mix of global revenues and uncertainty around how US government will achieve the $1.5 trillion in cuts. I've heard many people say, and I agree, that we are in uncharted territory," he said.
