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Fitch Warns It Might Cut US Rating If Fails To Rise Debt Ceiling

Capital Market/ 11:33 , Jan 16, 2013

Fitch ratings agency issued a strong warning to the United States yesterday to deal with its recurrent debt-ceiling dramas in a way which strengthens the economy in the long term, saying that its top “AAA” credit rating was at stake. Fitch said it might revise downward its notation for the United States from the “AAA” level if Congress did not reach agreement on raising the ceiling for the national debt. Fitch said that failure to raise the limit in time would lead to a formal revision by Fitch of its ratings of U.S. debt instruments, but the agency also said the risk of a U.S. default was extremely low. However, Fitch also warned that fundamental strengths in the U.S. economy were being undermined by the weight of debt and associated strains.

Looking back at 31 December 2012, the U.S. federal government debt reached the statutory debt limit of USD $16.394 trillion and consequently the Treasury began to implement extraordinary measures that will create an estimated USD $200 billion of additional breathing space under the debt ceiling.

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