Moody's not ready to downgrade the U.S. ... Yet.

  • Oct 7, 2013
  • Source: Forbes
  • by: Maggie McGrath
Despite John Boehner’s unyielding message on the morning show circuit on Sunday — that the House would not vote to re-open the government or raise the debt ceiling unless President Obama makes changes to the Affordable Care Act — credit-rating service Moody's MCO +0.24% said in a Monday morning report that neither the shutdown nor the impending debt ceiling deadline will affect U.S. creditworthiness.

“The shutdown has no effect on the government’s ability to pay interest and principal on its debt obligations, and therefore does not directly affect the government’s creditworthiness,” the report said, adding that even if the debt ceiling is not raised by the October 17 deadline, Moody’s believes the U.S. would continue to pay both interest and principle on its debts.

The last time there was a debt ceiling showdown, in July 2011, Standard & Poor’s downgraded the U.S. credit rating for the first time in its history, taking it from a AAA to an AA+; Moody’s and Fitch retained a rating of AAA. In Monday’s report, Moody’s said that the current debt ceiling debate is less dire than that of 2011, noting that “the budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then.”
 Source: Forbes
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