US Debt Downgrade: Implications and Why the Greek Debt Office Suspended Bond Issuance

On Friday, May 16, 2025, two seemingly unrelated news stories emerged. One went almost unnoticed, while the other continues to raise questions about its implications. The significant news was the downgrade of U.S. creditworthiness by Moody’s. The less noticed news involved the Greek Debt Management Agency (DMO) canceling a planned bond issuance scheduled for May 21. This decision by Greece highlights the cautious approach maintained in managing public debt amidst global uncertainties. Meanwhile, Moody’s downgrade underscores a pivotal moment not only for U.S. fiscal policy but also for its global economic standing. Although S&P Global Ratings had previously removed the coveted AAA rating from the U.S. in 2011, followed by Fitch Ratings in 2023, Moody’s delayed action until now. With all three major ratings agencies downgrading the U.S., it marks the first time this century that the country is no longer considered the ‘safe haven’ for investments. Mario Draghi described this move as a turning point affecting more than just tariffs and their consequences but also the U.S.’s position in global economics and politics. According to Moody’s, the decision reflects an increase over the past decade in public debt and interest payments significantly higher than comparable rated states. Foreign holdings of U.S. debt have doubled since 2011 to over $9 trillion within a total debt exceeding $36 trillion. Moody’s criticized successive U.S. administrations and Congress for failing to address large annual budget deficits and rising interest costs. Despite Treasury Secretary Scott Bessent acknowledging unsustainable debt levels, the administration insists on preventing a crisis. Ultimately, Moody’s downgrade signifies the failure of policies since the 2008 financial crisis and questions whether the dollar can maintain its status as a safe haven.