Dan Parker of Shamokin, Pennsylvania, holds a flag of the United States out of the White House in Washington on May 2, 2011.
Credit: Reuters/Kevin LamarqueBy Walter BrandimarteNEW YORK | Thursday, June 30, 2011 4 pm EDT
NEW YORK (Reuters) - the United States would have immediately with a "selective default" with excellent credit rating if it is missing a payment of the debt on 4 August, General Manager of Standard & Poor John Chambers told Reuters.
Chambers, who is also the Chairman of the Committee on S & P sovereign ratings, said on Tuesday that the US Treasury bills coming due August 4 could be evaluated at had ' if the Government fails to their honour. Treasures affected would be downgraded, but not as sharply, he said.
"If the US Government misses a payment, it will d," said Chambers. "That would produce right after August 4, when bills mature, because they do not have a grace period.".
Fears of a technical defect increased after budget negotiations between Democrats and Republicans collapses, in Washington, D.c., earlier this week. Even a brief by default by the United States immediately the country borrowing costs would increase on the fragile economic recovery and erode the status of the dollar as reserve currency.
On 4 August, the Department of the Treasury is due to pay off the coast of $ 30 billion of debt in the short term due to expire.
Debt negotiations deadlocked, new ideas are surfacing as the prioritization of debt payments. But the Secretary of the Treasury Timothy Geithner told legislators Wednesday that such an approach would still cause investors to shun the Treasury bills.
Geithner said that because the United States borrows now about 40 cents of every dollar of expense, prioritizing payments without a debt limit increase would require cutting 40 per cent of all government spending.
S & P is not the first agency to say that it will be to downgrade the United States if a payment is missed. Rater rival credit Moody on June 2 was the first to say that it would be to downgrade to the United States shortly after a possible failure related to the ceiling to the range of Aa.
Moody Wednesday, said that a downgrade of credit U.S. would also affect ratings of some States and municipalities with strong links to credit the Federal Government.
Chambers stressed that the probability of default U.S. is "extremely low", as the S & P expects an increase in last minute to the debt of the ceiling country just as it happened more 70 times since the 1960s.
He also noted a default on US Treasury bills - a point of reference against which all other liabilities are measured — would dwarf worries about ratings of credit U.S. as world markets would collapse.
Chambers said, however, that S & P is more concerned about the ability of the Government to effectively cut its deficit over the next two years, with the presidential elections in 2012 by a bipartisan agreement much more difficult.
S & P is currently the only one of the bodies of credit ratings of three major review perspectives on credit AAA rating to the United States to negative. He said that he sees a chance for one to three of a downgrade over the next two years.
Moody investors Service and Fitch Ratings expressed their concern about the pace of the budget negotiations in Washington, but still maintain a stable perspective on U.S. ratings.
Yet they have been more vocal about the risk of a "technical failure" in August. Fitch said earlier this month it would cut U.S. ratings of the issuer "restricted by default" If the Government lacks a more substantial debt payment on 15 August.
The Treasury has reached the limit of debt of the country $ 14.3 billion on May 16 and has made use of the extraordinary measures to keep its debt since then. Lack of alternatives to avoid a default on 2 August, Geithner said.
(Editing by Carol bishopric)
No comments:
Post a Comment