2023-11-11 02:10:42
© Reuters. White House Spokesperson Karine Jean-Pierre 07/11/2023 REUTERS/Leah Millis
By Davide Barbuscia and Andrea Shalal
NEW YORK/WASHINGTON (Reuters) – Ratings agency Moody’s has revised the outlook for the United States’ credit rating from “stable” to “negative”, citing large fiscal deficits and a decline in debt repayment capacity, drawing immediate criticism of the Biden administration.
The move comes after Fitch, another rating agency, downgraded the US sovereign rating this year, in the wake of months of political debate over the US debt ceiling.
“Continued political polarization in the US Congress increases the risk that successive administrations will be unable to reach consensus on a fiscal plan to slow the decline in debt repayment capacity,” Moody’s said in a statement.
Republicans who control the U.S. House of Representatives hope to announce a stopgap spending measure on Saturday aimed at avoiding a partial government shutdown by keeping federal agencies open even when current funding expires next Friday.
Fitch downgraded the US from AAA to AA+ in August, while S&P has maintained an AA+ rating since 2011.
While changing the outlook, indicating that a rating cut is possible in the medium term, Moody’s confirmed the long-term issuer and senior unsecured ratings at ‘Aaa’, citing US economic and credit strength.
“US institutional and governance robustness is also very high, supported in particular by the effectiveness of monetary and macroeconomic policy,” the agency said.
Officials from US President Joe Biden’s administration criticized the prospective cut.
White House spokeswoman Karine Jean-Pierre said the move was “another consequence of the extremism and dysfunction of Republicans in Congress.”
Treasury Undersecretary Wally Adeyemo said in a note that “although Moody’s statement maintains the United States’ AAA recommendation, we disagree with the change to a negative outlook. The US economy remains strong, and Treasury bonds are the world’s leading safe and liquid asset.”
(Reporting by Richard Rohan Francis, Davide Barbuscia, Andrea Shalal)
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