Fitch keeps U.S. credit rating on negative watch despite debt limit deal

The United States' "AAA" credit rating will remain on negative watch, despite a debt limit agreement that will allow the government to meet its obligations, Fitch Ratings said on Friday.

The credit agency said it would maintain the rating "as we consider the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories." Fitch said last week that a failure to reach a deal "would be a negative signal of the broader governance and willingness of the U.S. to honor its obligations in a timely fashion," and would be unlikely to be consistent with a "AAA" rating.

Analysts said even after House Republicans and the White House reached a deal, rating agencies could downgrade the U.S. government similarly to what happened in 2011, when S&P cut the U.S. rating by one notch even as a default was narrowly averted. The U.S. Senate on Thursday passed bipartisan legislation backed by President Joe Biden to suspend the government's $31.4 trillion debt ceiling, averting what would have been a first-ever default.

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