Debt Ceiling Deal Removes Risk — Fitch
ThinkstockThe recent agreement on the U.S. debt ceiling has removed the near-term risk to the United States’ AAA sovereign debt rating, according to Fitch Ratings. The agency said, “Without the distraction of a near-term funding crisis for the federal government,…
The recent agreement on the U.S. debt ceiling has removed the near-term risk to the United States’ AAA sovereign debt rating, according to Fitch Ratings. The agency said, “Without the distraction of a near-term funding crisis for the federal government, Congress and the Administration have the space to focus on the substantive fiscal policy choices … .”
Fitch also noted that agreement on a “credible” plan for medium-term deficit reduction is likely to preserve the country’s AAA rating and lead to a revision of the agency’s outlook, from “negative” to “stable.” However, if no plan is agreed, then the negative outlook “would likely be resolved with a downgrade later in 2013.”
The federal government still faces the automatic spending cut deadline of March 1 (the sequester) and a March 27 deadline to enact a continuing resolution on the 2013 budget to avoid a government shutdown. Should a deal not be reached by either deadline, Fitch does not anticipate an immediate review but believes that such a failure would “undermine confidence” in the government’s ability ever to reach an agreement.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.