Around two hours after S&P and Moody’s reiterated their ratings on U.S. credit, Fitch came out with its own statement.
The agency reminded us that it previously said it would likely lower its outlook if the Super Committee failed to agree on a deficit reduction deal. They’re currently reviewing their rating and they will update us by the end of the month.
Here’s their statement:
In Fitch’s August 16 statement, when it affirmed the US ‘AAA’ sovereign ratings with a Stable Outlook, the agency commented that it would update its US economic and fiscal projections in light of the work of the ‘Super Committee’. Fitch also commented that failure by the Super Committee to reach agreement would likely result in a negative rating action — most likely a revision of the rating Outlook to Negative, which would indicate a greater than 50% chance of a downgrade over a two-year horizon. Less likely would be a one-notch downgrade.
The announcement today that the Super Committee was unable to reach agreement on at least USD1.2 trillion of deficit-reduction measures underscores the challenge of securing the political consensus on how to reduce the federal budget deficit and place US public finances on a sustainable path over the medium-term. Fitch now expects to conclude its review of the US sovereign rating by the end of November.