(Reuters) -Ratings agency Moody’s said on Wednesday it expects risks to the sovereign credit profile of the United States to be limited from the recent turmoil in the country’s banking sector unless the strains deepen.
The collapse of Silicon Valley Bank and Signature Bank sparked a crisis of confidence in the U.S. banking sector, leading to a run on deposits at a host of regional banks despite authorities launching emergency measures to shore up confidence.
“The rapid deterioration in the operating environment for US (Aaa stable) regional banks over the past two weeks has indicated higher banking sector risk than we had previously factored in the sovereign’s credit profile,” Moody’s said.
The agency said it did not “expect significant direct fiscal costs for the sovereign from the current banking sector stress”. It, however, underlined that if the stress were to prolong, it could weaken the economic and fiscal strength of the country.
Earlier this month, Moody’s Investors Service revised its outlook on the U.S. banking system to “negative” from “stable”.
(Reporting by Nandhini Srinivasan in Bengaluru; Editing by Sriraj Kalluvila)
