Credit bureau Fitch Ratings says the U.S.’s AAA rating (the highest available rating) is in jeopardy due to a “debt ceiling brinkmanship” that could prevent the country from meeting some debts and others. He said the risks are increasing.
Late Wednesday, Fitch announced it was moving the U.S. to “Ratings Watch Negative” due to the increased risk of the U.S. defaulting, but said it “still expects the debt ceiling to be resolved before the X date.” There are,’ he added.The so-called X-date is the day the Treasury will run out of money to pay the bills, and Treasury Secretary Janet Yellen anticipates it. Arrive June 1st.
What does “Negative watch rating” mean?
That means Fitch is watching closely. Negotiations over the debt ceiling And he believes that the AAA rating currently held by US Treasurys may need to be downgraded.
In a memo, Fitch said, “We believe there is an increased risk that the debt ceiling may not be raised or stopped by date X, and as a result the government may begin to default on some debt payments. there are,” he said.
“The brinkmanship of the debt ceiling and the failure of U.S. authorities to meaningfully address the medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden, all point to downside risks to U.S. creditworthiness,” it added. there is,” he said.
Why is an AAA rating important?
An AAA rating is the highest rating of a country’s credit worthiness and indicates that the country is least likely to default. Fitch said AAA ratings are given “only where the ability to pay financial commitments is very strong.”
This is important because ratings affect investor expectations. An AAA rating ensures that investors have a low risk of buying bonds issued by the country. But lower ratings indicate higher risk, meaning countries with lower credit scores may need to pay higher interest rates to convince investors to buy bonds. This in turn will increase the cost of issuing government bonds.
what does the white house say?
A White House press secretary said, “This is another piece of evidence that default is not an option, and every responsible member of Congress understands that. “It underscores the need to quickly pass a broad bipartisan agreement.”
Thank you for reading CBS News.
Create a free account or log in
For even more features.