Moody's warns to downgrade US credit rating

Moody's ratings agency has warned that the US credit rating may be downgraded if 2012 budget negotiations do not produce debt-reducing policies.

Last Updated: Sep 12, 2012, 09:39 AM IST

Zeebiz Bureau

New York: Moody's ratings agency has warned that the US credit rating may be downgraded if 2012 budget negotiations do not produce debt-reducing policies, adding more pressure to the dollar and helping support crude.

"If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable," Moody's said in an emailed statement.

"If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1."

"Moody's downgrade pressured the dollar and added support for crude, but markets are waiting for the German court and Fed decisions," said Phil Flynn, an analyst at Price Futures Group in Chicago.

With Agency Inputs