Fitch May Downgrade U.S. Rating If Debt Ceiling Isn’t Raised

Fitch May Downgrade U.S. Rating If Debt Ceiling Isn't Raised

The U.S. government may face a new downgrade if they don’t manage to raise the debt ceiling. The rating agency Fitch has said that it is “very likely” that the U.S. would lose its AAAcredit rating if they fail to raise the debt ceiling in time.

Fitch Ratings, also said that the debt ceiling should be done with altogether. In a press conference, Fitch shattered Republican confidence that the Treasury Department can use incoming tax receipts to pay government debt and interest, while also considering military pay and Social Security, and also tax rebates and contractor and employees pays.

Fitch said in a statement “It is not assured that the Treasury would or legally could prioritize debt service over its myriad of other obligations, including Social Security payments, tax rebates and payments to contractors and employees. Arrears on such obligations would not constitute a default event from a sovereign rating perspective but very likely prompt a downgrade even as debt obligations continued to be met”.

This isn't the first downgrade problem the U.S. has had, with Standard & Poor downgrading the U.S. in August 2011, on the same issue of the debt limit.

Fitch seems to have sided with the President in his dispute with the Government over the raising of the debt ceiling.

Posted by James Fried on Wednesday January 16 2013, 4:39 AM EST. Ref: The New York Times. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0