The rating agencies were in on the fix. Amazing timing to start talking downgrade in the midst of the negotiations. If they were objective, our bonds should have been downgraded many months if not years ago when it became obvious that our spending and liabilities were unsustainable and the pols had absolutely no will to reform.
Maybe the time horizon makes sense for AAA though, not sure how forward looking they rate. 1 year, 5, etc. Seems nuts though when we are peddling 30 yr bonds... One thing is certain however, our bonds will be downgraded sooner rather than later. Inevitable.
I agree with you that our bonds are overrated and it is a matter of time. In my opinion, the agencies would not have the guts to downgrade this coming week if this deal passes. I suspect that the agency has the ability to have different ratings based on maturity, but that it may be too confusing for the markets to digest.