Pacific Investment Management Co.’s Mohamed A. El-Erian said there will be “massive consequences” if the U.S. loses its AAA credit rating.
The risk of a credit downgrade is 50 percent even if lawmakers reach an agreement to lift the nation’s debt ceiling before an Aug. 2 deadline, El-Erian, chief executive and co-chief investment officer at the world’s biggest manager of bond funds, said in a radio interview on “Bloomberg Surveillance” with Tom Keene.
Pimco expects the debt ceiling to be lifted, El-Erian said.
Treasury Secretary Timothy F. Geithner has said the U.S. will run out of options to prevent a default unless the $14.3 trillion borrowing limit is increased.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they may consider downgrading the nation’s AAA ranking if officials fail to resolve the stalemate.
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