“It is extremely unlikely that the
Treasury is not going to continue to pay on those securities,” Moody’s
CEO Raymond McDaniel said in an interview with CNBC.
U.S. lawmakers have until Oct. 17 to
figure out a deal on raising the nation’s $16.7 trillion borrowing limit
before the Treasury Department hits its payment deadlines. A default
would obviously be harmful for the U.S.’s credibility and the economy.
“Hopefully it is unlikely that we go
past Oct. 17 and fail to raise the debt ceiling, but even if that does
happen, then we think that the U.S. Treasury is still going to pay on
those Treasury securities,” McDaniel said.
Markets have so far dealt calmly with
Washington’s gridlock, showing no sign of panic or worries. The calm is
all the more remarkable considering that President Barack Obama himself
told Wall Street last week it should be more “concerned” with the debt ceiling fight.
McDaniel said the calm could be
attributed to the fact that markets remember the 2011 debt ceiling fight
and they remember how it was eventually resolved.
“[It] feels a lot like we’ve seen this
movie before,” said McDaniel. “Ironically because we have had this
experience in the recent past [it] gives people more of a sense of calm
than perhaps they should have.”
“The fact that the market is reacting
more calmly is good, but to the extent that policy makers are going to
act when stress or distress reaches a certain level, the market can play
a role in indicating that,” he added.
As of this writing, there doesn’t appear to be an end in sight for the partial government shutdown, now into its second week.
The U.S. has a triple-A rating and a
“stable outlook” with Moody’s. S&P, however, downgraded the U.S.’
credit rating to AA-plus from its triple-A rating in 2011. S&P also
has a “stable outlook” reading for country.
Fitch rates the U.S. AAA with a “negative outlook.”
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