Moody’s: U.S. can forget about Triple-A rating if it violates debt ceiling

The Treasury is running out of time and money. [Moody’s]

 

The U.S. will lose its Triple-A rating if it violates the debt ceiling, even if it quickly acts to meet its obligations, a rating agency said Tuesday.

The U.S. is facing a looming deadline to raise the debt ceiling, and there’s concern that despite the insistence of figures including Treasury Secretary Steven Mnuchin and House Speaker Paul Ryan, it won’t get lifted in time. The Treasury has estimated it will reach the debt limit by Sept. 29.

Ten more countries that may default on debt after Argentina

Ecuador, Egypt, Pakistan, Venezuela, Belize, Cuba, Cyprus, Greece, Jamaica and Ukraine are all on the verge of a default, according to Moody’s ratings.

Argentina defaulted for the second time in 12 years after hopes for a midnight deal with holdout creditors were dashed, setting up stock and bond prices for declines on Thursday and raising chances a recession could worsen this year.

After a long legal battle with hedge funds that rejected Argentina’s debt restructuring following its 2002 default, Latin America’s third-biggest economy failed to strike a deal in time to meet a midnight deadline for a coupon payment on exchange bonds.

US Faces Credit Rating Downgrade By Three Top Firms This Year

In the fiscal cliff negotiations, Obama held the line against entitlement reform, but the resulting deal could lead to downgrades by all three top debt ratings agencies later this year.

When Standard and Poor’s cut the United States debt rating last year, the agency issued a press release outlining the reasons behind their historic decision. Amid criticism of partisan brinksmanship there was a bottom line which had to do with entitlements,

The [2011 debt] plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.