Moody’s places US debt rating on review
July 14th, 2011 - 11:41 am ICT by IANSNew York, July 14 (IANS/EFE) Moody’s Investors Service announced Wednesday that it has placed the US debt on review with an eye toward possibly downgrading it, given the possibility that Congress may not be able to reach an accord to raise the debt limit.
US government bonds currently enjoy the highest rating, Aaa.
In explaining the decision, Moody’s cited “the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations”.
The White House and Republicans in Congress are conducting intensive negotiations to try and raise before Aug 2 the debt ceiling this country is authorised to have and which is currently $14.29 trillion.
The US reached the limit May 16, but the Treasury used spending and accounting adjustments which, combined with better tax collection than expected, have permitted it to continue operating without yet having any impact on government activities.
In its warning Wednesday, Moody’s said that it had also placed “on review for possible downgrade the Aaa ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks”.
It added that the downgrade will be made if there is non-payment of the principle or interest on current government obligations, and it emphasised that “there is a small but rising risk of a short-lived default”.
“An actual default, regardless of duration, would fundamentally alter Moody’s assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate,” the rating agency said.
–IANS/EFE
rd
- Obama asks Congress to solve debt crisis - Jul 24, 2011
- Failure to raise debt limit could trigger slump: Obama - Jul 07, 2011
- Congress must act now on debt limit: Top US official - Jul 15, 2011
- Fitch maintains its AAA US credit rating - Aug 17, 2011
- US loses AAA credit rating, terms it 'a facts-be-damned decision' (Lead) - Aug 06, 2011
- Moody's may downgrade India's three top private lenders - Apr 30, 2012
- US markets plunge after the downgrade - Aug 08, 2011
- Obama touts possible bipartisan pact on debt limit - Jul 20, 2011
- Wall Street down as Bernanke rules out immediate stimulus - Jul 15, 2011
- Moody's downgrades Spain's debt rating - Mar 11, 2011
- US probes S&P;'s ratings on mortgage bonds before crisis - Aug 19, 2011
- US avoids default; retains AAA rating for now - Aug 03, 2011
- Moody's cuts credit ratings of 16 Spanish banks - May 19, 2012
- For first time, US loses AAA credit rating - Aug 06, 2011
- US loses 'stable' outlook from top agencies - Nov 29, 2011
Tags: aug 2, debt ceiling, debt obligations, efe, fannie mae, farm credit banks, federal home loan, federal home loan banks, financial institutions, freddie mac, government activities, government bonds, government obligations, home loan banks, intensive negotiations, investors service, july 14, statutory debt limit, timeliness, timely basis