Debt deal doesn't dispel downgrade fear

Investors fear the United States may be headed for a credit ratings downgrade even if the Senate approves a $2.1 trillion package of spending cuts later on Tuesday.

Though the bill removes the threat of imminent default by raising the national debt limit enough to last until 2013, its cuts are only about half the $4 trillion in savings that ratings agencies Standard & Poor's and Moody's have said would be enough to confirm the country's triple-A rating with a stable outlook.

Adding a sense of immediacy to downgrade anxieties, S&P said in mid-July there was a 50-50 chance it would cut U.S. ratings in the next three months if lawmakers failed to craft a meaningful plan to cut the nation's deficit.

S&P could downgrade U.S. ratings soon after the bill is signed by President Barack Obama, given that the agency will have all the information it needs to make a decision.

Read Full Article from Reuters

- Posted: 2011-08-02 12:03:10

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