High chance of US downgrade even if ceiling raised-S&P

NEW YORK,  (Reuters) – The risk that the United  States will lose its AAA credit rating in the next three months  has risen considerably, even if  lawmakers reach an agreement to  raise the country’s debt   ceiling later this month, an S&P official said yesterday.

John Chambers, chairman of Standard & Poor’s sovereign  ratings committee, told Reuters in an interview that “this is  the time” for the White House and Republicans to reach a  credible budget agreement to tackle the country’s long-term debt  problems.

“If you get a small agreement, that will lead to a  downgrade,” Chambers warned.

S&P revised in April its outlook on U.S. credit ratings to  negative, which traditionally signals a downgrade in 12-18  months.

But “that horizon has shortened,” Chambers said, because it  is very unlikely that Washington will be able to craft a  meaningful budget agreement next year if it misses the chance  now.

S&P is the only one of the big-three agencies with a  negative outlook on U.S. ratings. Moody’s Investors Service on  Wednesday placed U.S. ratings on review for a possible downgrade  to account for the risk — which it considers low albeit growing  — that the U.S. Treasury will miss debt payments in August if  the debt ceiling is not raised.

S&P yesterday also placed U.S. ratings on creditwatch,  similar to a review for downgrade, because it also sees a  growing risk of a ceiling-related technical default in August.

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