- Ratings agency Fitch put the US's credit on watch for a possible downgrade on Wednesday.
- Fitch expressed concerns about political partisanship amid negotiations over raising the debt ceiling.
The US debt ceiling impasse has hit a crucial stage — the country's prized AAA credit rating is at risk, which could impact $4 of $4.
On Wednesday, major ratings agency Fitch put the US's credit on watch for a possible downgrade, citing $4 in negotiations over raising the $4
This means the US credit rating — which is AAA now, signaling the government-issued treasury bills are the "safest" investment — could be downgraded should the debt limit not be raised before the so-called $4 when the country runs out of money to pay its bills.
"The Rating Watch Negative reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching X-date," $4
The ratings agency expects a resolution to the debt ceiling crisis before the X-date. However, the risk that the debt ceiling may not be raised has also gone up.
"We believe risks have risen that the debt limit will not be raised or suspended before the X-date, and consequently that the government could begin to miss payments on some of its obligations," said Fitch.
Fitch also signaled concerns about challenges over governance amid the debt ceiling crisis.
"The failure to reach a deal to raise or suspend the debt limit by the X-date would be a negative signal of the broader governance and willingness of the US to honor its obligations in a timely fashion, which would be unlikely to be consistent with a 'AAA' rating," per Fitch.
A rating downgrade negatively affects the creditworthiness of an issuer of debt — in this case, the US — and could increase its borrowing cost.
Immediately after Fitch's announcement, the US Treasury bills maturing in early June spiked 7%, per $4
And jittery investors are already edgy as the X-date approaches. On Wednesday, $4 as the talks dragged on. The $4 closed 0.73% lower at 4,115.24, while the $4 ended 0.77% lower at 32,799.92.