http://www.latimes.com/business/money/la-fi-mo-debt-limit-fitch-credit-rating-20131015,0,7828607.storyFitch puts U.S. credit rating on downgrade watch over debt fightBy Jim Puzzanghera
October 15, 2013, 2:39 p.m.
WASHINGTON -- Fitch Ratings on Tuesday put the U.S. AAA credit rating on watch for a potential downgrade because of the standoff over raising the nation's debt limit.
The company said it still believed the debt limit would be raised soon, but the "political brinkmanship" was risking a default.
The Treasury Department has said it would run out of borrowing authority by Thursday if the $16.7-trillion debt limit is not increased. Democrats and Republicans in Congress were working Tuesday to strike a deal to raise the limit before the deadline.
"Although the Treasury would still have limited capacity to make payments after (Thursday) it would be exposed to volatile revenue and expenditure flows," Fitch said, noting Treasury officials have said they would run out of borrowing authority and be left with $30 billion cash on hand and incoming revenues to pay bills.
"The Treasury may be unable to prioritize debt service, and it is unclear whether it even has the legal authority to do so," the company said in a report. "The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as Social Security payments to citizens -- all of which would damage the perception of U.S. sovereign creditworthiness and the economy."
