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Fitch upholds AAA rating for U.S.

The Los Angeles Times
By The Los Angeles Times
2 Min Read Nov. 29, 2011 | 14 years Ago
| Tuesday, November 29, 2011 12:00 a.m.

WASHINGTON — Fitch Ratings on Monday reaffirmed its AAA rating for U.S. government debt but revised its long-term outlook to negative because of the failure of the congressional supercommittee to agree to deficit cutting measures.

Fitch said the United States retained its top rating because of “still-strong economic and credit fundamentals,” including the dollar’s status as the world’s reserve currency. But the ratings company downgraded its long-term outlook from stable because of “declining confidence” that policymakers will enact “timely fiscal measures necessary to place U.S. public finances on a sustainable path.”

The outlook downgrade means there is a slightly greater than 50 percent chance that Fitch will downgrade the U.S. credit rating during the next two years.

Fitch’s announcement was made after the other two leading credit rating companies, Standard & Poor’s and Moody’s Investor Service, said last week that the failure of the supercommittee would not lead to a cut in their ratings on U.S. debt.

Moody’s continued to give U.S. debt its highest AAA rating, but had downgraded its outlook to negative in August because of the contentious debate over raising the nation’s debt ceiling. S&P roiled financial markets a few days later by downgrading its U.S. credit rating to AA+ because the company said the deal to raise the debt ceiling fell short of what was needed to stabilize the country’s long-term finances.

Later in August, Fitch reaffirmed its AAA rating but warned that the failure of the supercommittee to strike a deal this fall would affect the company’s long-term outlook for U.S. debt.

Fitch said that an agreement on a major deficit reduction package after the 2012 elections would “relieve downward pressure” on the U.S. credit rating. But the company noted that the size of such a package would have to be greater than it would be this year because of the delay in enacting cost-cutting measures.

Fitch warned that “failure to reach agreement in 2013 on a credible deficit reduction plan and a worsening of the economic and fiscal outlook would likely result in a downgrade” of the U.S. credit rating.


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