The Cost of AA vs AAA Ratings
Over the past few weeks, there's been lots of talks about how a default would affect the United States economy. But over the past few days, the talk has shifted a bit to include talk of a growing possibility that even if Washington averts default, the country could still face a credit downgrade from its golden triple-A rating.
Jacob Goldstein at Planet Money reports today on why a downgrade would probably not be a big deal. But Third Way, a think tank that advocates for "moderate" policies, created a chart that shows the difference in what countries with a double-A rating and countries with a triple-A rating pay in yields for 10-year bonds.
The bottom line, as you can see, is that on average a double-A country pays about three-quarters of a point higher yield than a triple-A country. But nothing is black and white: Note that double-A Japan already pays a lower yield (1.09) than triple-A United States (3.00).
If you want to dig deeper, the U.S. Treasury has historical data on what it's paid for bonds since 1990.