Moody's Ratings downgraded the United States' long-term credit rating from Aaa to Aa1 and changed its outlook from "negative" to "stable."

The move marks the loss of the United States' last remaining top-tier rating from the three major credit agencies, as Moody's joins Fitch and S&P Global in grading the U.S. below the highest "triple-A" level.

Rising Government Debt: Moody's cited a sustained increase in government debt and interest payment ratios over more than a decade as a reason for the downgrade.

The U.S. debt-to-gross domestic product ratio will climb from nearly 100% in 2025 to around 130% by 2035, according to Moody's.

"Even in a very positive and low probability economic and financial scenario, debt affordability remains materially weaker than for other Aaa-rated and highly rated sovereigns," Moody's said in a statement in late March.

Persistent Fiscal Deficits: The agency noted that successive U.S. administrations and Congress have failed to agree on measures to reverse large annual fiscal deficits and growing interest costs.

Moody's said it expects these trends to continue without material reductions in mandatory spending or deficits which will drive debt and interest burdens even higher over the next decade.

"While we recognize the US' significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics," Moody's wrote Friday, per Bloomberg.

Markets React: The S&P 500, tracked by the SPDR S&P 500 ETF (NYSE:SPY), and the Nasdaq 100, tracked by the Invesco QQQ Trust (NASDAQ:QQQ), slipped in Friday's after-hours trading on the news.

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