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U.S. Credit Rating at Risk of Cut

Fitch Ratings warns the nation’s AAA rating is under threat from the political standoff over the debt limit; DBRS Morningstar places the U.S. AAA rating under review “with negative implications”; and the cost of insuring U.S. sovereign debt with derivatives has risen.

By Ruth Carson | May 25, 2023 at 09:29 AM
Photo: Pedestrians walk near the New York Stock Exchange in New York on January 27, 2023. Photographer: John Taggart/Bloomberg Pedestrians walk near the New York Stock Exchange in New York on January 27, 2023. Photographer: John Taggart/Bloomberg

The tension around the U.S. debt-limit negotiations ratcheted up after Fitch Ratings warned the nation’s AAA rating was under threat from a political standoff that’s preventing a deal.

Fitch may downgrade its assessment to reflect the increased partisanship that is hindering a resolution despite the fast-approaching so-called “X date,” it said, referring to the point at which Washington will run out of cash. It moved the United States to “rating watch negative” under its classification. Meantime, DBRS Morningstar placed the U.S. ratings of AAA under review “with negative implications.”

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