Fitch says spending cuts would not prompt ratings action

NEW YORK Wed Feb 27, 2013 9:03am EST

A flag is reflected on the window of the Fitch Ratings headquarters in New York February 6, 2013. REUTERS/Brendan McDermid

A flag is reflected on the window of the Fitch Ratings headquarters in New York February 6, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Fitch Ratings on Wednesday said implementation of automatic U.S. government spending cuts due March 1, along with a government shutdown, would not prompt a negative rating action.

Implementation of the spending cuts, known as the "sequester," and a government shutdown, would however "further erode confidence that timely agreement will be reached on additional deficit reduction measures necessary to secure the 'AAA' rating," Fitch said in a statement.

Fitch said the suspension of the debt limit to May 19 has reduced pressure on the U.S. 'AAA' rating, and said it does not expect a repeat of the U.S. debt ceiling crisis of August 2011.

Failure to raise the debt ceiling in a timely fashion however would prompt a review and likely downgrade of the U.S. sovereign rating, Fitch said.

(Reporting By Chris Reese; Editing by Theodore d'Afflisio)

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Comments (2)
Whatsgoingon wrote:
“Failure to raise the debt ceiling in a timely fashion however would prompt a review and likely downgrade of the U.S. sovereign rating, Fitch said.” If the logic is “everybody gets AAA ratings until the first default”, as what happened in 2008, what’s the meaning of having credit rating in the first place?

Feb 27, 2013 10:30am EST  --  Report as abuse
Whatsgoingon wrote:
“Failure to raise the debt ceiling in a timely fashion however would prompt a review and likely downgrade of the U.S. sovereign rating, Fitch said.” If the logic is “everybody gets AAA ratings until the first default”, as what happened in 2008, what’s the meaning of having credit rating in the first place?

Feb 27, 2013 10:30am EST  --  Report as abuse
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