ABC’s Dan Arnall ( @abcmoneyguy ) reports:
It has happened. Moody's said it would put the United States on review for downgrade if there is not substantial progress on a debt deal by mid-July. They did just that this afternoon.
"Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis," reads the a press release from the credit rating agency. "An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a AAA rating would likely no longer be appropriate."
Of great interest here – Moody’s says that even if the debt ceiling is raised, the agency will likely downgrade the outlook for U.S. ratings to negative unless a “substantial and credible” deal is struck to put than nation’s future borrowing and spending ways on a more sustainable path.
Financial markets are already reacting to this news even as negotiators in Washington seek a deal behind closed-doors.
Some highlights from the Moody’s release:
The U.S. Treasury Department quickly reacted with its own statement.
“Moody’s assessment is a timely reminder of the need for Congress to move quickly to avoid defaulting on the country's obligations and agree upon a substantial deficit reduction package," said Under Secretary for Domestic Finance Jeffrey A. Goldstein.