s & p downgrades us debt , page-31

Caylus

"For fundies however, expectation and realisation are two different things. Many funds are MANDATED by their prospectus to hold ONLY AAA paper."

The US has only been downgraded by S&P nt Moody or Fitch - so how does that work?

From the wsj:

"J.P. Morgan Chase & Co. analysts estimate some $4 trillion worth of Treasurys are pledged as collateral by borrowers such as banks and derivatives traders. If that collateral isn't considered as high quality by lenders, the borrowers could be required to cough up more cash or securities to put the minds of lenders at ease.

That could force investors to sell off other assets to come up with the money." (Source: http://online.wsj.com/article/SB10001424053111903366504576490841235575386.html)

Maybe of interest to some:

http://www.guardian.co.uk/news/datablog/2010/apr/30/credit-ratings-country-fitch-moodys-standard#