Wednesday, October 16, 2013

Fitch Places U.S. Under Review For A Credit Downgrade


Fitch Ratings, one of the big three credit ratings agencies, issued a warning shot today, saying that while it affirmed the United States' AAA credit rating, it was placing it on "rating watch negative."


In other words, it was placing the country's long-term credit rating under review for a potential downgrade.


The main reason? The debacle in Washington. Remember, the last time a debt ceiling debate got this hot and heavy, S&P downgraded the U.S.'s long-term credit rating to AA-plus.


"The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.," Fitch said in a statement. "This 'faith' is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns."


Reuters reports the U.S. Treasury said the threat from Fitch is a reminder of just how close the country is from defaulting for the first time in history.


"The announcement reflects the urgency with which Congress should act to remove the threat of default hanging over the economy," a Treasury spokesperson told Reuters.


Source: http://www.npr.org/blogs/thetwo-way/2013/10/15/234929451/fitch-places-u-s-under-review-for-a-credit-downgrade?ft=1&f=1003
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