Exclusive: Backup debt plan doesn't support rating: Moody's

Reuters News
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Posted: Jul 19, 2011 1:17 PM
Exclusive: Backup debt plan doesn't support rating: Moody's

NEW YORK (Reuters) - A government backup debt plan to raise the country's debt ceiling and avoid imminent default could still lead to a downgrade of U.S. ratings in the next year or so, Moody's said on Tuesday.

Senator Mitch McConnell's "Plan B," increasingly seen as a "Plan A" in Washington, would avoid any immediate downgrade of the coveted U.S. triple-A rating, Moody's analyst Steven Hess told Reuters in an interview.

"But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don't seem to be very large," Hess said. "Therefore this plan might result in a negative outlook on the rating."