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The ratings firm said on Wednesday that the US is at risk of losing its top sovereign debt status to Fitch because of “increasing political partisanship that impedes reaching a decision to raise or suspend the debt limit.”
The United States “AAA” long-term foreign The default rating for the currency issuer has been placed on a negative rating watch rating, which means that Fitch is reviewing the rating for a possible downgrade.
Remember that in 2011 the US lost its top S&P rating as the government came close to default in a similar standoff. S&P did not return the US to its highest rating. Debt ratings are important because lenders base interest rates on the creditworthiness of the borrower.
The rating firm’s statement “Fitch still expects resolution of the debt limit before the tenth date,” at which point the US Treasury exhausts its ability to repay its obligations. He said. “However, we believe that the risks have risen that the debt limit has not been raised or suspended ahead of schedule, and therefore the government may start to default on some of its obligations.”
In the past three months, the US dollar index (DXY) he have decreased 1.7% The White House and Republican negotiators have so far failed to reach an agreement to increase or suspend the $31.4 trillion debt limit. This point was reached on January 19, 2023, but the Treasury Department has been using extraordinary measures to avoid default since then.
Treasury Secretary Janet Yellen said those measures could expire on June 1.
Other countries or countries that have received an “AAA” rating from Fitch include Australia, Denmark, Germany, Luxembourg, the Netherlands, Switzerland, Norway, Sweden, the European Union and Singapore.
Moody’s still has an “Aaa” rating, its highest rating, in the United States
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