NEW YORK, Wed Nov 7, 2012 – Moody’s Investors Service said on Wednesday it will hold off on its judgment of whether to cut its sovereign credit rating for the United States until after the 2013 budget process is completed.
The re-election of U.S. President Barack Obama removed the uncertainty over who would lead the country but the maintenance of the status quo in a still-divided Congress means the likelihood of a continued tough fight to hammer out a budget.
Moody’s currently has the United States at its highest rating of Aaa, but with a negative outlook.
If policymakers are able to reach consensus and produce a budget that results in a stabilization of the fiscal outlook and “then a downward trend in the ratio of federal debt to GDP (gross domestic product) over the medium term,” Moody’s reiterated it would like affirm the Aaa rating and return the rating outlook to stable.
“In contrast, if negotiations fail to produce policies that lead to debt stabilization and ultimately reduction, then we expect to lower the rating, probably to Aa1,” Moody’s said, outlining a one notch downgrade.