A few days before the program deadline US Treasury He does not have the cash to pay off general obligations, due to the failure to decide on increasing the debt ceiling, the rating agency Fitch Ratings has assigned the country’s credit rating to AAA on negative watch.
According to Fitch, the danger to the United States Do not raise or suspend your debt ceiling before date X, which is when the Treasury depletes its cash position.
(U.S. debt will jeopardize your AAA credit rating.)
This scenario would lead to Government Default on some of its obligations, which could lead to an increase in the budget deficit and an ever-increasing burden, which indicates negative risks to the creditworthiness of the United States.
The rating agency confirms that this country has reached the limit of its debt $31.4 trillion on January 19, 2023while the treasure He began to take extraordinary measures that did not go too far.
(The weakness of the dollar due to the disagreement on the debt of the United States).
“The Treasury Department stated that these extraordinary measures could be exhausted on June 1, 2023. The Treasury’s cash balance was $76.5 billion as of May 23, and large payments are scheduled for June 1-2.“.
Date X is approaching, which means for Fitch Ratings that failure to reach an agreement before this date would be a negative sign of the US administration and its willingness to meet its commitments in a timely manner. Also, it is not likely to be consistent with an “AAA” rating.
“Prioritizing debt securities over other payments due after date X would prevent default.”the details.
(The Federal Reserve maintains that US inflation remains high.)
Faced with the dangers this fact entails in the American economy, Alvaro Humberto Ojeda, Vice President of Global Business for AAA Values, Investment BankingHe emphasized that the negative note will increase the expected return on US sovereign bonds, as well as on international assets recognized as “risk-free” and considered the reference basis for estimating the cost of capital for investments.
“The high required cost of capital makes investors more selective in their investmentsOjeda said.
(The United States could not fulfill its obligations).
in the same vein, Theodore Kahn, associate director of control risk He said Fitch Ratings was already studying default risks in the United States.
“We have seen a very intransigent attitude on the part of the Republicans in Congress, on terms of radical cutsHe confirmed.
(The United States is easing sanctions against Venezuelan oil company PDVSA.)
In turn, the teacher Rosario University, Alejandro OsicheHe made it clear that the possibility of a US default on its debt is very remote anyway. but, Every day of the political debate in this country puts more pressure on the economic outlook And, therefore, in the consequences that it can bring to the rest of the world’s markets.
“This will take a few more days. There will be more political tensions, but an agreement must be reached in the end“, He said.
He added that if this does not happen, there will be a critical scenario for the country’s economy and for the global markets’ confidence in the bonds issued by the US Treasury, But also about the dominance of the United States as the main economy in the world.
Diana K. Rodriguez T.
Portfolio journalist
