"I think it really brings home that shift being a regime shift rather than a cyclical one," Katimbo-Mugwanya said. S&P said the assumption that governments would prioritise servicing debt over spending promises had rarely been tested at such high debt levels. For now, despite the steepest increases in borrowing costs in decades, investors still see little risk in holding governments' longer-term debt. POLICY WATCHGreater focus on longer-term risks should bring scrutiny of government policies. Still, with higher debt an economic reality, few governments are left with the coveted AAA rating.

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Persons: Brendan McDermid, Fitch, David Katimbo, Mugwanya, Bill Ackman, Moritz Kraemer, Fichan, Kraemer, Kshitij Sinha, Martin Lenz, LBBW's Kraemer, Yoruk Bahceli, Davide Barbuscia, Tomasz Janowski Organizations: New York Stock Exchange, REUTERS, AAA, Financial, Fitch, EdenTree Investment Management, P Global, LBBW, European Union, European Commission, European Central Bank, Syz, New York Fed, Life Asset, Union Investment, Thomson Locations: New York City, U.S, United States, Japan