Although global ratings agency Fitch Ratings had warned on Tuesday that it would downgrade the credit rating of the United States, it had remained confident that the country was stable enough to comply with its debt obligations.
On Tuesday, Fitch said the delay of obtaining an agreement about the debt cap limit had raised concerns about the US' capability to pay off its debts. Fitch was one of the three ratings agencies who had issued a negative outlook on the sovereign credit of the US.
New York-based TD Securities interest rate strategist Gennadily Goldberg said, "It seems like what we saw from S&P just before the downgrade, they were essentially warning us that the debt ceiling standoff will not be tolerated and this is not in line with a country that maintains an AAA credit rating. It's citing these artificial default risks as the main reason ... They are essentially saying get this done now."
The US Treasury said Congress and the US government would need to reach an agreement to raise its debt ceiling on or before October 17. October 17 would be the day the country would be reaching its current USD16.7 trillion borrowing capacity limit.
On the other hand, Fitch believed that the US government would be raising its USD16.7 trillion debt cap limit. The ratings agency also believed that the US would have enough political will and capacity to fulfill its obligations even if the debt ceiling was not raised.
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