(Bloomberg) -- The US government’s AAA credit ranking will stay on negative watch at Fitch Ratings even though the country has sidestepped for now the risk of a default with the passage through Congress of new legislation to suspend the statutory debt ceiling.
The credit assessor warned last week that the US’s top rating was under threat, moving it to “rating watch negative” amid the then-ongoing political standoff that threatened to trigger a potential default of the nation’s debt. The Senate on Thursday passed legislation to suspend the US debt ceiling through the 2024 election, and it now only has to go to President Joe Biden for signature to become law.
“Although the resolution of the U.S. debt limit impasse allows the government to meet its obligations” Fitch is maintaining the negative watch while it considers “the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories,” Richard Francis, Fitch’s senior director of sovereign rating said in a note with a colleague.
Strategists at TD Securities last week warned clients that Fitch could possibly even downgrade the US rating regardless of the outcome of debt-ceiling discussions.
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