Rating agency Moody’s said on Wednesday it expects risks to the US sovereign credit profile to be limited from the recent turmoil in the country’s banking sector unless tensions deepen.
The collapse of Silicon Valley Bank and Signature Bank sparked a crisis of confidence in the US banking sector, leading to bank runs on several regional banks, despite authorities launching emergency confidence-building measures.
“The rapid deterioration in the operating environment for US regional banks (Aaa stable) over the past two weeks has indicated greater risk in the banking sector than we had previously considered in the sovereign credit profile,” Moody’s said.
The agency said it does not “expect significant direct fiscal costs to the sovereign from the current stress in the banking sector.” However, he emphasized that if the stress persists, it could weaken the country’s economic and fiscal soundness.
Earlier this month, Moody’s Investors Service revised its outlook for the US banking system from “stable” to “negative”.
