Moody’s, Fitch brush off shutdown threat to U.S. sovereign rating
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As the United States shutdown enters the third day with a projected telling effect on the economy, international rating agencies, Moody’s Investors’ Service, and Fitch Ratings have brushed off the impact of the shutdown to their rating of the U.S economy.
Moody’s says it poses no immediate threat to its top-notch Aaa rating as long as the country makes its debt payments on time.
“Although the shutdown will be credit negative for the sovereign to the extent that it disrupts the U.S. economy, it will not have any immediate implications for the U.S. government’s credit rating,” Moody’s said Monday.
Fitch Ratings on Friday had equally said a shutdown would not affect its AAA-rating in the United States.
The federal shutdown, the first since 2013, would make it likely that the issue of raising the statutory borrowing limit will become part of the next round of budget negotiations in Washington, the rating agency said in a research note.
The shutdown stopped federal discretionary spending that represents about 38 percent of non-debt related outlays and includes most day-to-day government operations, according to Moody‘s.
It is unclear when the shutdown will end as Republican and Democratic lawmakers have been unable to reach a funding agreement, even a temporary one.
Even with the current impasse on government funding, Moody’s expected Congress will raise the debt ceiling before the government is expected to run out of cash in late February or early March after extraordinary measures by the Treasury Department are exhausted.