Fitch placed the United States’ credit rating on negative watch on Wednesday amid the uncertainty surrounding the current debt ceiling dispute and the prospect of a first-ever default.
The top-tier United States’ AAA long-term foreign-currency issuer default rating has been placed on negative watch due to a stalemate in Congress that has brought the country to the verge of default, said the credit ratings agency.
In a note released on Wednesday, Fitch said, “The Rating Watch Negative reflects increased political partisanship that is hindering reaching a solution to raise or suspend the debt limit despite the fast-approaching x-date.”
The move comes as Republican and Democratic lawmakers seek to raise the US debt ceiling, but no deal has yet to be reached. Treasury Secretary Janet Yellen has warned that the US may be unable to pay its debts by June 1, which may lead to a catastrophic default in the US and worldwide.
The rating agency reaffirmed its optimism that Congress will be able to reach a deal before the deadline.
“However, we believe risks have risen that the debt limit will not be raised or suspended before the x-date and consequently that the government could begin to miss payments on some of its obligations,” the rating agency said.
Later on Wednesday, the White House cited the move by Fitch Ratings as a reason for the urgent need to raise the debt ceiling.
This is further proof that default is not an option, as understood by all serious legislators. A White House spokesman said this “reinforces the need for Congress to quickly pass a reasonable, bipartisan agreement to prevent default.”