Here’s an ominous warning from the “King of Bonds” concerning the AAA credit ratings for the United States and United Kingdom. From Bloomberg’s Dakin Campbell today:

Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA rating, but not any time soon.

“It’s certainly nothing that’s going to happen overnight,” Newport Beach, California-based Gross said in an interview today on Bloomberg Television. “The markets are beginning to anticipate the possibility.”

Standard & Poor’s lowered its outlook on the U.K.’s AAA credit rating today to “negative” from “stable” and said the nation faces a one-in-three chance of a rating cut as its debt approaches 100 percent of gross domestic product. U.S. marketable debt is at about 45 percent of GDP, according to Bloomberg data.

A downgrade was not “imminent,” Gross earlier told CNBC after Reuters reported he said via e-mail the U.S. dollar, equities and government bonds fell on speculation the nation is at risk of losing its top credit rating…

“Both the U.K. and the U.S. have prospective deficits of 10 percent annually as far as the eye can see,” Gross said. “At some point over the next several years” the debt of each “may approach 100 percent of GDP, which is a level at which country downgrades tend to occur,” he said.

Source:

“Pimco’s Gross Says U.S. ‘Eventually’ Will Lose AAA (Update3)”
Dakin Campbell
Bloomberg, May 21, 2009

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