NEW YORK (CNNMoney) — In the wake of the Congressional debt committee’s failure to find agreement, Fitch Ratings affirmed the United States’ top-notch credit rating on Monday but revised its rating outlook to “negative,” down from “stable.”
That change indicates that the agency sees a slightly greater than 50% chance that it will downgrade the country’s AAA rating within two years.
In affirming the rating, Fitch said the U.S. economy is still the most productive in the world and the government has “unparalleled financing flexibility.” The U.S. bond market is the largest and most liquid in the world and the dollar is the global reserve currency — held by banks worldwide and a staple in international transactions.
But the agency cited its “declining confidence” that Congress would enact “timely fiscal measures” to put the country’s public finances on a sustainable path.
It also noted that a worsening in the economic outlook would further mar the fiscal picture.
As it is, Fitch estimates that U.S. debt held by the public will hit 90% of GDP by the end of the decade, up from about 70% today. And interest payments on the debt would likely consume more than 20% of tax revenues.
“Failure to reach agreement in 2013 on a credible deficit reduction plan and a worsening of the economic and fiscal outlook would likely result in a downgrade of the U.S. sovereign rating,” the agency said in a written statement.
Last week, the two other major ratings agencies — Moody’s and Standard Poor’s — said the so-called super committee’s failure did not in itself affect their credit ratings for the country.
Moody’s affirmed its AAA rating. And SP, which downgraded its U.S. credit rating this summer because of the “political brinksmanship” in the debt ceiling debate, said it would keep its rating for U.S. bonds at AA-plus for now.
Both agencies had previously assigned a negative outlook on their U.S. rating.