Definition of Negative Watch

What is the definition of the term negative watch? What does the term negative watch mean?

There are three major credit rating agencies in the world - S&P, Moody's and Fitch Ratings.

All three of these agencies utilize a term called "negative watch".

If a country or company is placed on "negative watch", this means that the credit agency has a negative outlook for the subject's current credit rating.

So, let's say that S&P currently has a AAA credit rating assigned to the United States. Let's also say that S&P comes out and says that they have revised their long-term credit outlook for the United States to negative.

What this means is that the United States is in danger of losing its AAA rating. It's a warning from the credit agencies - you are in risk of losing your current credit rating unless you make some changes.

If a negative outlook is issued, then it means that there is a strong chance that a downgrade could occur over the next 6-24 months.

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Davemanuel.com Articles That Mention Negative Watch:

Moody's: US Aaa Sovereign Rating Upgraded To Stable

Standard and Poor's Revises US Credit Outlook