(San Francisco) The rating agency Fitch on Wednesday placed the United States’ AAA rating, the highest possible, on “watch” due to the risk of default, according to a press release.
The move “reflects political tensions that stand in the way of resolving the issue, such as raising or suspending the debt ceiling as the deadline rapidly approaches,” the organization said.
Congress must quickly raise the debt ceiling to avoid bankruptcy, which the US Treasury says could happen in nine days. This ceiling is currently 31,000 billion dollars.
Fitch “expects” a timely resolution, the statement said.
But experts believe “the risks have increased that the debt ceiling will not be raised or suspended in time and that the government will start to fail to make some payments”.
President Joe Biden’s teams and Republican camp negotiators have yet to find a compromise.
To vote in favor of a higher debt ceiling, the Republicans require a budgetary effort. Democrats also favor deficit reduction, but not in the same way.
“Failure to find an agreement […] would be a negative sign in terms of governance in general and the willingness of the United States to honor its obligations on time,” Fitch insisted.
The rating agency signals that it will closely monitor what will happen: if the United States does not pay a debt deadline that will be due on the 1er or June 2, it will be considered in default, and the following maturities, due within 30 days thereafter, will become “very risky” (CCC).
Fitch notes, however, that for all other debt, the rating will remain unchanged, as the country holds the largest reserve of silver in the world.