Moody’s Investors Service announced yesterday that the US government’s credit rating will be reviewed and possibly downgraded if the national debt limit is not increased.
One of the largest credit rating agencies, Moody’s ranks the credit worthiness of government and corporate debt issues. Currently the US government has an Aaa rating from Moody’s, the highest possible ranking.
According to Moody’s, “the heightened polarization over the debt limit has increased the odds of a short-lived default.”
Moody’s believes that unless there is an agreement to increase the debt limit soon, there will be no significant progress until after the 2012 elections.
If the the debt limit is raised, the Aaa rating will remain in place. In Moody’s opinion, this is the most probable result.