Moody's warns US over triple-A rating

13 September 2012

The US could be stripped of its triple-A credit rating next year unless policymakers' budget negotiations prove successful, Moody's has warned.

According to an update on America's fiscal situation conducted by the leading credit agency, the country's rating hinges on the outcome of these Congressional talks as the maintenance of its current Aaa with a negative outlook into 2014 is "unlikely".

Moody's explained that should the discussions result in the creation of specific policies that "produce a stabilization and then downward trend in the ratio of federal debt to gross domestic product", the US will hold on to its rating on a stable outlook.

However, the group added that should the negotiations fail to produce such an outcome, it expects to lower the rating to Aa1.

Furthermore, Moody's stated that its rating outlook also "assumes a relatively orderly process for the increase in the statutory debt limit", as this is likely to be reached by the end of this year.

By Asim Shah

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