Jim Rogers: US credit downgrade is just a matter of time

America's levels of borrowing make it inevitable that it will lose its AAA-credit rating, says veteran US investor Jim Rogers.

James McKeigue
By
published
in Features

Veteran US investor Jim Rogers expects the US to lose its AAA-credit rating. He concedes that it won't happen "this month, or this quarter, but it is certainly going to happen". His prediction follows credit ratings agency Standard & Poor's recent decision to downgrade its outlook on US government debt.

S&P says there is a one-in-three chance that the US will lose its AAA rating yet Rogers feels that America's levels of borrowing make it inevitable. "The US is the largest indebted nation in the history of the world and the debt is going higher and higher." The 68-year old says that he would not buy 30-year Treasuries (US government IOUs) at "3%, 4%, 5% or 6% interest, as the government will never be able to pay off those debts".

Yields on 30-year government debt are currently hovering around 4.4%. Rogers, and many other analysts, expect that yield to rise past the 5% mark as investors demand more reward for holding US debt. Other financial heavyweights, such as Bill Gross, co-founder of the world's largest bond fund, PIMCO, have also warned investors to avoid US government debt.

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James McKeigue
James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the Forbes.com London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine. 

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