US faces rating downgrade as Moody’s, S&P sniff default
Moody’s Investors Service jolted White House debt talks on Wednesday with a warning that the US may lose its top credit rating soon, piling pressure on Washington to lift its debt ceiling.world Updated: Jul 14, 2011 23:34 IST
Moody’s Investors Service jolted White House debt talks on Wednesday with a warning that the US may lose its top credit rating soon, piling pressure on Washington to lift its debt ceiling.
Separately, the Wall Street Journal reported that Standard & Poor’s has warned lawmakers and top business groups privately that it might cut the US’ credit rating if the government defaults on any payments, including social security cheques, even if it makes all its debt payments.
The announcement by Moody’s, the first among the major rating agencies to place the US’ AAA rating on review for a possible downgrade, came minutes after President Barack Obama and congressional leaders began the fourth straight day of deficit talks.
Republicans are demanding steep spending cuts in return for supporting an increase in the $14.3 trillion borrowing limit.
The US Treasury has said it will run out of money to pay its bills on August 2. Moody’s said it saw a “rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations.”
Even Chinese credit ratings agency Dagong has put US sovereign debt on negative watch for a possible downgrade.