Moody's Warns on Debt Ceiling
NEW YORK (TheStreet) -- Moody's has said the ongoing debt-ceiling talks have increased the possibility of a rating change for the U.S., just hours before the House of Representatives goes to vote on the Boehner debt plan.
In a statement released late Friday afternoon, the ratings agency said the Triple A rating on U.S. government bond debt was being further jeopardized because of the prolonged debt-ceiling deliberations. The agency added that its current review of the U.S. rating, announced July 13, would likely result in a shift to a negative outlook.
The report said: "However, if there were a default on a Treasury debt obligation, a downgrade would likely follow, even if the default were swiftly cured and investors suffered no permanent losses."
It comes just four days ahead of the Aug. 2 deadline when the U.S. is expected to hit its current borrowing limit.Moody's also warned in its statement that a limited debt-ceiling increase would lead to a negative outlook rating because of the "limited magnitude of current deficit reduction proposals."
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