The impasse in Washington over raising the federal debt ceiling has exposed U.S. money-market mutual fund clients to increased danger, according to Moody's Investors Service.
"Direct risks include the potential for a missed interest or principal payment on government bonds for a short period of time, as well as incremental weakening of the overall credit quality of money-market fund portfolios that have U.S. government exposure," the New York-based ratings company said today in a statement.
U.S. money-market funds held about $760 billion in Treasuries, government-agency debt and repurchase agreements in April, according to JPMorgan Chase & Co. Moody's has placed the Aaa rating of U.S. debt on review for possible downgrade as the country approaches Aug. 2, the day the Treasury Department says the government will reach its legal borrowing limit and default on some obligations if the ceiling isn't increased.
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