Analysts said the ouster of Kevin McCarthy as House Speaker elevates the risk of a shutdown next month. — Bloomberg
NEW YORK: Fitch Ratings, which stripped the United States of its top credit grade two months ago, says a potential government shutdown after representative Kevin McCarthy’s ouster as House Speaker won’t have an effect on the nation’s rating.
The comments came after McCarthy lost his leadership post following a revolt by Republican party hardliners over his compromise with Democrats to avert a shutdown last weekend.
Analysts, including those at Goldman Sachs Group Inc, said the ouster elevates the risk of a shutdown next month.
“We expect that political brinkmanship around government funding negotiations will remain tense and a shutdown later this year can’t be ruled out,” said Richard Francis, Fitch’s co-head of Americas sovereign ratings. “No matter, we don’t think that the political brinkmanship or even a government shutdown in the coming weeks would affect the US’ AA+/stable sovereign rating.”
McCarthy had held the job of US House Speaker for nine months, with his removal coming after a decision to allow a vote on a funding extension. His replacement may be deterred from offering a similar bill before a Nov 17 deadline.
Fitch downgraded the United States’ credit rating to AA+ from AAA in August, citing a “steady deterioration” in governance standards over the last 20 years, including on fiscal and debt matters. It contributed to a bond rout that saw both 10 and 30-year Treasury yields touch the highest levels since 2007. — Bloomberg
