Fitch Downgrades US Sovereign Debt Rating to AA+

Fitch, one of the top three US credit rating agencies, has downgraded the nation's sovereign credit grade from AAA to AA+.

The decision, made on August 1, comes as a consequence of the US government's "erosion of governance" and the increasing burden of government debt, as explained by Fitch.

The rating downgrade reflects Fitch's apprehension about the country's fiscal outlook and highlights the frequent clashes over the debt limit witnessed in the past two decades.

The agency points to tax cuts, new spending programs, and various economic challenges that have resulted in larger budget deficits, with little attention paid to the mid-term concerns surrounding entitlement expenses.

Fitch's statement reads, "The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to "AA" and "AAA" rated peers over the last two decades."

Fitch's recent rating cut comes on the heels of the agency placing the US sovereign debt's AAA rating on watch, less than two months ago.

The rating provider had warned of potential grade cuts due to downside risks, political brinkmanship, and the escalating debt burden.