"US will not be immediately downgraded despite Super Committee fails" Rating Agencies

Rating agencies Standard & Poor's and Moody's said on Monday there will no immediate downgrade of their credit ratings on the United States due to the failure of a congressional "super committee" to reach an agreement on debt reduction.

But Fitch, the third leading ratings agency, which currently has the most positive rating of the three on U.S. debt  , said it could cut the outlook on its "triple-A" rating, with a downgrade an outside possibility.

U.S. lawmakers on Monday announced they had abandoned their effort to rein in the country's debt, in a sign that Washington likely will not be able to resolve a dispute over taxes and spending until 2013 — after next year's presidential and congressional elections.

Fitch said in a statement that, when it had affirmed the United States "AAA" ratings with a "stable" outlook in August, it had "also commented that failure by the super committee to reach agreement would likely result in a negative rating action".

It added such action was "most likely a revision of the rating outlook to negative, which would indicate a greater than 50 percent chance of a downgrade over a two-year horizon. Less likely would be a one-notch downgrade".

S&P, which in early August had downgraded its top-tier rating on the United States on concerns over the government's budget deficit and rising debt burden, said its rating was not affected by the failure.

S&P's downgrade helped spark a global financial market rout, which has been exacerbated by Europe's worsening sovereign debt crisis.

Moody's said the committee's failure would not by itself lead to a rating change, saying the outcome was "informative for the rating analysis but not decisive".

S&P, in a statement, said: "The fiscal committee's inability to agree on fiscal measures that would stabilize U.S. government debt as a share of GDP is consistent with our Aug. 5 decision to lower our rating to 'AA-plus'."

The committee was given the task to cut U.S. deficits by at least $1.2 trillion over 10 years. Automatic spending cuts are due to begin in 2013 now that the committee has failed.

U.S. President Barack Obama, seeking to calm jittery financial markets, said the United States was not facing an imminent threat of default — as it did last August — and that "one way or another" there would be at least $2.2 trillion in deficit cuts over 10 years. 

In addition to the $1.2 trillion in automatic cuts that are to be triggered with the super committee's failure, there were $1 trillion in cuts agreed to August that are locked in.

S&P's current AA-plus rating on the United States long-term debt is the second-highest rating. The agency's outlook on that rating is negative.

Moody's rates the long-term U.S. debt as triple-A, also with a negative outlook. 
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