Credit rating agency Fitch has placed the United States’ AAA long-term foreign-currency issuer default rating on “negative watch” as a deadline fast approaches to raise the country’s debt ceiling.
In a news release, Fitch said that its negative watch rating “…reflects increased political partisanship that is hindering reaching a solution to raise or suspend the debt limit despite the fast-approaching X-date.”
The X-date refers to the day when the U.S. could default on its debt payments. Treasury Secretary Janet Yellen has said that date is June 1.
Fitch noted that it still expects politicians in Washington, D.C., including President Joe Biden, to arrive at a resolution before the debt default deadline.
The announcement arrives after debt ceiling negotiations between teams representing President Biden and Republican House Speaker Kevin McCarthy have failed to result in an agreement to raise the U.S. debt limit so that the federal government can continue paying its obligations.
McCarthy has said that Democrats and Republicans continue to disagree over government spending.
The U.S. has never defaulted on its debt payments before though a similar standoff over the debt ceiling occurred in 2011, causing U.S. stock markets to decline 17% before a deal was reached.
