U.S. Govt May Be Cut by Moody’s If No Progress on Debt Limit

Moody’s Investors Service said that if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the US government’s rating under review for possible downgrade, due to the very small but rising risk of a short-lived default.

Moody’s said if the debt limit is raised and default avoided, the Aaa rating will be maintained. Moody’s said a “credible agreement” on substantial deficit reduction would support a continued stable outlook. Lack of an agreement could prompt Moody’s to change its outlook to negative on the Aaa rating.