Two credit rating agencies emphasized the continued rise in debt in the United States and developed countries, and S&P Global Ratings warned that only severe market pressures can change this trend. In terms of product structure, the operating income of 10-30 billion yuan products is respectively 401/1288/60 million yuan, and the overall sales volume of the company in 2023 is 18,000 kiloliters, up 28.10% year-on-year, showing significant growth.

The analysis of the Group of Seven (G7) and similar economies has intensified concern about their debt. This week, the two countries will face elections, and the Bank for International Settlements (BIS) has warned that governments around the world are vulnerable to a sudden loss of confidence. S&P pointed out in its report on Thursday that the likelihood that the United States, Italy, and France will maintain their debts at their already high levels is slim.

In its report on Thursday, S&P pointed out that it is unlikely for the United States, Italy, and France to successfully maintain their debt at current high levels. "Only a sharp rise in market pressure during their election cycle can persuade these governments to implement more resolute budget restructuring," wrote analyst Frank Gill. "Nevertheless, the sharp deterioration in borrowing conditions will also increase the scale of the necessary fiscal adjustments."

Scope Ratings pointed out that the continued rise in borrowing costs will put pressure on the budgets of these countries and the UK, and this change will "aggravate the risk of sovereign debt sustainability." Analyst Frank Gill wrote: "Only a sharp rise in market pressures during their election cycle can persuade these governments to implement more resolute budget restructuring. Nevertheless, the sharp deterioration in borrowing conditions will also increase the scale of the necessary fiscal adjustment."

Both reports were released on the day the US market closed on July 4th. It was a sensitive time during the election cycle in the United States and other countries. Biden is facing increasing pressure to withdraw from the 2024 presidential campaign, British citizens voted on Thursday, and France will vote for a new parliament this weekend.

Last Sunday, the BIS released a report with a warning from its chief economist, Claudio Borio: market experience shows that "things seem sustainable until suddenly they're not". The United States, as the world's largest economy, is still the focus of attention. Last week, the International Monetary Fund criticized US borrowing behavior. On Tuesday, Fed Chairman Powell once again admitted that "our debt level is not unsustainable, but the path we are on is unsustainable, and this is undisputed."

Both rating agencies are concerned about the frequent debates in the US Congress over the debt ceiling issue. After the debate, lawmakers usually agree to increase or suspend the debt ceiling to avoid a financial market shock. Scope analyst Dennis Shen said that this debate shows how difficult it is to repair public finances.

He wrote: "If the threat of default is needed at this stage to force a relatively modest reduction in the 2023 Fiscal Responsibility Act, this highlights the pressure that may be needed to ensure a stable debt trajectory." S&P's Gill also emphasized that there is no consensus on the necessity of fiscal tightening in the United States. He said: "The lack of broad support for taking proactive measures to meaningfully reduce the large fiscal deficit and curb government debt growth has affected creditworthiness."

The temporary election in France prompted investors concerned about the country's fiscal determination to demand a premium on its debt, and this also attracted the attention of rating agencies. S&P pointed out that the country's public finance prospects are now more uncertain, but there is also "a glimmer of hope"-if Sunday's election creates a hung parliament and fails to reach a consensus on the budget, the 2024 budget will apply. However, Scope's Shen warned that the country's rising debt may cause more investors to panic after the spread between its bonds and German bonds "widens significantly".

He wrote: "If at this stage, the threat of default is needed to force a relatively modest reduction in the 2023 Fiscal Responsibility Act, this highlights the pressure that may be needed to ensure a stable debt trajectory." Similarly, S&P's Gill also emphasized that there is no consensus on the necessity of fiscal tightening in the United States.

He said: "The lack of broad support for taking proactive measures to meaningfully reduce the large fiscal deficit and curb government debt growth has affected creditworthiness." Both rating agencies are concerned about the frequent debates in the US Congress over the debt ceiling issue. After the debate, lawmakers usually agree to increase or suspend the debt ceiling to avoid a financial market shock. Scope analyst Dennis Shen said that this debate shows how difficult it is to repair public finances.

The temporary election in France prompted investors concerned about the country's fiscal determination to demand a premium on its debt, and this also attracted the attention of rating agencies. S&P pointed out that the country's public finance prospects are now more uncertain, but there is also "a glimmer of hope"-if Sunday's election creates a hung parliament and fails to reach a consensus on the budget, the 2024 budget will apply. However, Scope's Shen warned that the country's rising debt may cause more investors to panic after the spread between its bonds and German bonds "widens significantly".

He said:"The new government needs to continue to maintain cooperative relations with neighboring countries in France and the European Union and coordinate a consistent fiscal overhaul. If the sustainability of France's debt is questioned, the yield spread is easy to further expand."

Editor: Eason