President Barack Obama pauses as he makes a statement on the debt ceiling vote in the Rose Garden at the White House August 2, 2011 in Washington, DC.Alex Wong/Getty Images
Moody's Investors Service on Tuesday confirmed its triple-A rating of the United States, citing the decision to raise the debt limit, but assigned a "negative" outlook to the rating, pressing lawmakers to create a long-term fiscal consolidation plan.
Moody's had placed U.S. ratings "on review for a possible downgrade" on July 13, fearing that the government could miss debt payments if lawmakers failed to increase the country's legal borrowing limit by the Aug. 2 deadline.
"Today's agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the U.S. government debt metrics within Aaa parameters over the long run," Moody's said in a statement.
With the debt-ceiling issue solved, the agency is now focusing on the long-term challenges to U.S. public finances, burdened by a deficit that has reached about 9 per cent of the country's economy - one of the highest since the Second World War.
It assigned a negative outlook on the rating, however, in a sign that a downgrade is still possible in the next 12 to 18 months.
Also on Tuesday, Fitch Ratings said the agreement to raise the borrowing capacity of the United States means the risk of a sovereign default is "extremely low" and commensurate with a triple-A rating.
However, Fitch pointed out that without significant changes in fiscal policy the U.S. debt to gross-domestic product ratio "will reach 100 per cent by the end of 2012, and will continue to rise over the medium term - a profile that is not consistent with the United States retaining its AAA sovereign rating."
The firm said it expects to conclude its scheduled review of the U.S. sovereign rating by the end of August.
Even after a bruising battle in Congress to complete a $2.1-trillion (U.S.) deficit reduction deal, Fitch said the triple-A status remains strong.
Financial markets took the release differently.
U.S. Treasuries added gains after the Fitch comments. Wall Street stocks and the dollar were stuck in negative territory.
"Fitch expectedly kept the rating AAA, which is essentially what the market had already been pricing in. The more important question here is whether the bill will be enough to appease S&P, which wanted $4-trillion in cuts, with many in the market believing that there is a realistic chance of a downgrade from S&P," said Gennadiy Goldberg, fixed income analyst at 4Cast Ltd. in New York.