Fitch may lift US coveted AAA rating that makes its bonds among the safest bets in the world.
Not waiting until a Thursday milestone is crossed, Fitch Ratings put the US government on notice Tuesday afternoon that it may lift the nation’s coveted AAA rating that makes US bonds among the safest bets in the world.
“Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinksmanship and reduced financing flexibility could increase the risk of a US default,” the ratings agency said in a policy statement.
Standard & Poor’s downgraded the US credit rating to AA status on Aug. 5, 2011, the last time politicians took the nation to the brink of running completely out of borrowing authority.
There have been growing questions as to why Fitch and Moody’s Investors Service haven’t followed suit given the political infighting and threat of debt default in the United States.
Sounding a tone similar to S&P’s in 2011, Fitch said Tuesday that the “repeated brinksmanship over raising the debt ceiling also dents confidence in the effectiveness of the US government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the US economy.”
Fitch placed the United States on what it calls Rating Watch Negative status, meaning it could downgrade the US credit rating.
“Fitch expects to resolve … (the issue) … by the end of q114 at the latest,” the statement said, referring to a decision on a downgrade before the end of March 2014. mcclatchydc.com
AT/HJ
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