Moody’s Says U.S. Faces Loss of Aaa Without Budget Deal in 2013 |
| Bloomberg - Sep 11, 2012 |
Moody’s Investors Service said it may join Standard & Poor’s in downgrading the U.S.’s credit rating unless Congress reduces the percentage of debt-to-gross- domestic product during budget negotiations next year.
The U.S. economy will probably tip into recession next year if lawmakers and President Barack Obama can’t break an impasse over the federal budget and if the George W. Bush-era tax cuts expire in what’s become known as the “fiscal cliff,” according to a report by the nonpartisan Congressional Budget Office published on Aug. 22. The rating would likely be cut to Aa1 from Aaa if an agreement isn’t reached, Moody’s said in a statement.
Moody’s put the rating under review with a negative outlook in August 2011, when the U.S. pushed back a decision on spending and raised its so-called debt ceiling after months of political wrangling. S&P cut its rating to AA+ that month, blaming the nation’s political process. Investors ignored the reduction and Treasuries rallied, with the yield on the benchmark 10-year note since declining to record lows and the S&P downgrade drawing the ire of investors such as Warren Buffett, the biggest shareholder of Moody’s, who said after the S&P decision that U.S. should be “quadruple-A.”
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- Posted: 2012-09-11 12:03:20
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