Bangkok--9 Aug--Standard & Poor's
On Aug. 5, 2011, we lowered our long-term sovereign rating on the United States of America to 'AA+' with a negative outlook from 'AAA'.
Based on our criteria for government-related entities (GREs), this downgrade of the U.S. results in a downgrade of Army & Air Force Exchange Service (AAFES).
Accordingly, we are lowering our corporate credit rating on AAFES to 'AA-' from 'AA', but affirming our 'A-1+' short-term rating on the organization and removing all the ratings from CreditWatch, where they were placed with negative implications on July 15, 2011.
The stable outlook reflects our opinion that, based on our GRE criteria, a future downgrade of the U.S. to 'AA' or 'AA-' would not result in another downgrade of AAFES.
Standard & Poor's Ratings Services said today that it lowered its corporate credit rating on Army & Air Force Exchange Service (AAFES) to 'AA-' from 'AA'. At the same time we affirmed our 'A-1+' short-term rating on this government-related entity (GRE). In addition, we removed all the ratings from CreditWatch, where they were placed with negative implications on July 15, 2011. The outlook is stable.
"The downgrade reflects the GRE link with the United States of America, for which our long-term sovereign rating is now 'AA+', with a negative outlook," said Standard & Poor's credit analyst Helena Song.
The 'AA-' rating on AAFES reflects Standard & Poor's opinion that there is a very high likelihood the U.S. government would provide timely and sufficient extraordinary support to AAFES in the event of financial distress. We assess the standalone credit profile (SACP) of AAFES as 'a'.
In accordance with our criteria for GREs, our view of a very high likelihood of extraordinary government support is based on our assessment of:
AAFES' very important role as a provider of service to military personnel around the world, including meeting key political (military-related) objectives of the government and in the implementation of key national policies; and
The very strong link between AAFES and the U.S. government.
Although our ratings outlook on the U.S. is negative, our outlook on AAFES is stable. Based on our GRE criteria, a future downgrade of the U.S. to 'AA' or 'AA-' would not result in another downgrade of AAFES. Our 'a' stand-alone credit profile on AAFES should also remain unchanged.
RELATED CRITERIA AND RESEARCH
2008 Corporate Criteria: Analytical Methodology, April 15, 2008
General Criteria: Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Mimi Barker, New York (1) 212.438.5054,
[email protected]
Analyst Contacts:
Helena Song, CFA, New York (1) 212-438-2477
Mariola Borysiak, New York (1) 212-438-7839