Moody's May Downgrade US--Becomes White House Ally

 

“Moody’s Investors Service said today that if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the US government’s rating under review for possible downgrade, due to the very small but rising risk of a short-lived default. If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody’s to change its outlook to negative on the Aaa rating.”

 

And, a settlement is not enough, in Moody’s eyes. The government also needs to make substantial progress as it sets budget levels over the next decade.

 

Douglas A. McIntyre