July 29, 2011

Moody's: No immediate downgrade if debt deal misses deadline

By Michael Winter, USA TODAY
Updated 4m ago

Moody's today indicated it would not immediately downgrade the United States' triple-A credit rating if a debt-ceiling deal is not reached by Tuesday, saying it expects the government to continue to meet its Treasuries obligations "for a number of days," Reuters reports.

But, in a report, Moody's said it expects to affirm the top rating with a negative outlook, meaning a downgrade could come in the ill-defined "middle term." It said neither plan from the Republicans and Democrats would preserve the Aaa rating.

"If the debt limit is not raised before Aug. 2, we believe that the Treasury would give priority to debt service payments and could thus postpone a potential debt default for a number of days," the Moody's report said.

Thursday, Moody's placed 177 U.S. municipal issuers indirectly linked to the U.S. government on review for possible ratings downgrades.

The Hill, citing Democrats "familiar with the situation," is reporting that President Obama is open to a two-day extension of the debt ceiling if no deal is reached by Tuesday.

The Capitol Hill newspaper also has more on the Moody's report.

http://content.usatoday.com/communities ... deadline/1