White House Braces for S&P's Downgrade

Friday, 05 Aug 2011 06:07 PM

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The debt-ceiling crisis may be history but the threat of a downgrade by ratings agency Standard and Poor's has the White House on alert, sources close to the matter tell CNBC.

standard, poors, downgradeOn July 14, Standard and Poor's put the U.S. government on a credit watch with negative implications, meaning there was at least a one in two chance the U.S.’s long-term debt would be downgraded within 90 days, CNBC reports.

An S&P spokesman declined to comment.

Congress gave the government the green light to raises its $14.3 trillion debt ceiling and avoid defaulting on Aug. 2. Prior to that, Republicans and Democrats were at odds in Congress over the role of tax hikes and spending cuts should play in return for lifting the government's borrowing limit.

While both sides came to an agreement and the ceiling was lifted, default fears prompted agencies to threaten to strip the country of its AAA rating.
Lingering debt concerns still has rating agency analysts concerned.

A government official meanwhile, has told ABC News that the federal government is expecting Standard & Poor’s to downgrade the rating of US debt from its current AAA value, the network reports on its site. The official did not say how far the rating would fall.

"Officials reasons given will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction," ABC News reports on its site.

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