Fact Box: High US credit rating drags on debt ceiling talk.

May 26 (Reuters) – Negotiations between the White House and Republicans to raise the $31.4 trillion debt ceiling left markets uncertain and worried about the potential economic impact.

International rating agencies have warned of downgrading the country if they fail to reach an agreement. Following are some of the actions taken by the agencies in recent days.

Fitch:

Fitch earlier this week put the US credit rating on notice. The agency currently rates the country’s debt “AAA” – the highest level.

Fitch said it still expects the dispute to be resolved before X-date, after which the federal government will not have sufficient financing to meet the payments.

Treasury Secretary Janet Yellen has insisted that the actual X-date is June 1, but some Republicans have questioned that deadline.

Fitch has assigned 11 ratings negative implications on US credit-linked notes (CLNs).

Moody’s:

The agency expects the U.S. government to continue to make timely debt payments, but public statements from lawmakers during the negotiations could change its assessment of the U.S. credit outlook ahead of potential problems.

Moody’s currently has an “Aaa” rating for the US government with a stable outlook – the highest rating for creditworthiness.

S&P Global:

The agency has not yet put its U.S. ratings on its watch, but it has the second-highest rating in the country since 2011, behind only Fitch and Moody’s.

That year, S&P made a bold call to downgrade America’s rating to “AA-plus” from the top “AAA” even though default was narrowly averted.

The agency cited high political polarization and lack of adequate measures to correct the country’s fiscal outlook for the decision.

DBRS Morning Star:

On Thursday, DBRS Morningstar downgraded the U.S., warning of the implications of an imminent no-deal.

Another agency, Scope Ratings, also gave the US its ‘AA’ rating earlier this month due to long-run risks associated with the debt ceiling.

Reporting by Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila

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