U.S. keeps its AAA Fitch credit rating
Friday, March 21, 2014
ISTANBUL - Credit ratings agency Fitch has affirmed the U.S.' AAA credit rating to but has changed its negative ratings watch that was placed on the country in October 2013 to stable.
"The federal debt limit was suspended in mid-February in a timely manner and in a way that avoided casting uncertainty over the full faith and credit of the U.S., in contrast to the crises in August 2011 and October 2013," Fitch said in a statement.
The agency added: "The debt ceiling crises in August 2011 and October 2013 do not appear to have negatively affected U.S. bond yields or reduced foreign holdings of Treasury securities. Therefore, Fitch does not believe the role of the U.S. dollar, sovereign financing flexibility or debt tolerance has been materially damaged."
Fitch assumes that the federal debt limit, which has been suspended until 15 March, 2015, will be suspended again or raised in due course before the Treasury exhausts its extraordinary measures and capacity to fund the government.
The Federal debt limit/ceiling is a legislative mechanism that limits the amount of national debt that the U.S. Treasury can issue by limiting how much money the government may borrow. In order to raise this limit both the House of Representatives and the U.S. Senate must agree and this has been at the root of the U.S.' financial crises in August 2011 and October 2013.
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