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U.S. AAA rating dependant on drop in debt ratio, says Moody's

  • The United States stands to lose its AAA debt rating if next year's budget negotiations do not result in policies that will reduce the country's debt, according to Moody's Investors Service.

    "If those negotiations lead to specific policies that produce a stabilisation 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 on Tuesday.

    "If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to AA1."

    Last year, rival ratings agency Standard & Poor's stripped the United States of its top rating after Congress failed to implement a long-term deficit reduction plan after a political stalemate brought the country to the brink of default.

    Moody's rates the United States AAA but has kept the country on negative outlook.