Fitch Ratings remains of the opinion that an agreement will be reached to raise the debt ceiling prior to Aug. 2 and that the U.S. government will make full and timely payment on all of its obligations. As previously stated by Fitch, in the unlikely event that the ceiling is not raised by Aug. 2
Fitch Ratings remains of the opinion that an agreement will be reached
to raise the debt ceiling prior to Aug. 2 and that the
U.S.
government will make full and timely payment on all of its obligations. As
previously stated by Fitch, in the unlikely event that the ceiling is not
raised by Aug. 2 - the date that the Treasury Department predicts that the
federal government's borrowing authority will be exhausted and it will not be
able to securely meet all of its obligations - Fitch will place the U.S.
sovereign rating on Rating Watch Negative.
Fitch has previously commented that a credible budget deficit reduction plan
that would place public finances on a sustainable path over the medium to long
term is necessary to underpin the 'AAA' status of the
U.S.
federal government. Fitch will conclude a review of the
U.S.
sovereign rating following resolution of the current debt ceiling impasse and
in light of any agreement that is reached on reducing the federal budget
deficit to a more sustainable level. Agreement on a credible fiscal
consolidation strategy will secure the
U.S.
'AAA'
status; failure to do so will inevitably weaken the sovereign credit profile
and may result in a sovereign rating downgrade.
In a report published today 'Rating Linkages to the U.S. Sovereign Rating'
Fitch outlines potential credit and rating implications for sectors and
entities in the event that the
U.S.
sovereign rating was to fall into the 'AA' category, as well as the remote
scenario whereby the
U.S.
government missed a due payment on a Treasury security. The primary sectors
discussed in the report are financial institutions, corporates, public finance
and structured finance.
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