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Fitch to review US rating unless debt ceiling raised

If the federal debt limit is not raised prior to the so-called "X date," Fitch would put the United States sovereign credit rating under review, with potentially negative implications, the rating agency announced on Wednesday.

Fitch stated that the US Congress must agree on spending levels for the next fiscal year in order to prevent a government shutdown, but added that if such an event occurs nonetheless, it would not have a direct impact on the country's "AAA" rating. However, failure to raise the federal debt limit that was re-imposed in March would jeopardize the Treasury's ability to meet debt service and other obligations, and would thus have rating consequences, the agency warned.

The credit appraiser said it continues to assume some expansion in fiscal policy led by tax cuts, but that the likelihood of that move has fallen since the beginning of the year.

Breaking the News / IB