Credit Rating, U.s. Debt Limit | featured news

Fitch Ratings said Tuesday it will keep its rating on U.S. debt at the highest grade, AAA, and issued a "stable" outlook, meaning it expects the rating to stay there.

The downgrading of U.S. government bonds by Standard & Poor’s ensures that the 2012 election will be fought on the battlefield of debt, as Electoral College math begins mingling with dire economic figures.

The United States had its triple-A rating confirmed by two key ratings agencies on Tuesday after Washington struck a last-minute deal to avoid a debt default, but threats of future downgrades remain.

Could the U.S. lose its top credit rating even if a deal is reached to raise the debt limit? Market analysts and investors increasingly say yes. The outcome won't be quite as scary as a default, but financial markets would still take a blow. Mortgage rates could rise. States and cities, already strapped, could find it more difficult to borrow. Stocks could lose their gains for the year.

The debt deal impasse doesn't just threaten the U.S. credit rating. President Obama's political standing also appears at risk.

Standard & Poor's reiterated on Thursday it sees a real risk that future U.S. government deficits may meaningfully miss discussed targets and that there is a 50-50 chance the U.S. AAA credit rating could be cut within three months, perhaps as soon as August.

The United States would immediately have its top-notch credit rating slashed to "selective default" if it misses a debt payment on August 4, Standard & Poor's managing director John Chambers told Reuters.

Ratings agency Moody's warned on Thursday it would consider cutting the United States' coveted top-notch credit rating if the White House and Congress do not make progress by mid-July in talks to raise the debt limit.