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Scope, which is seen as the leading European credit rating
agency, said that recurrent debt-ceiling crises have resulted in
phases of debt repayment distress for the U.S government, adding
that the government is dependent on last-minute congressional
action to ensure repayment of its debt in full and on time.
A rise in political polarisation, divided government since
November 2022 congressional elections and more elevated federal
deficits over the forthcoming years are the other reasons Scope
cited for the ratings review.
The U.S. government hit its $31.4 trillion borrowing limit in
January, amid a standoff between the Republican-controlled House
of Representatives and President Joe Biden's Democrats.
The United States could run out of money to pay its bills as
soon as June 1 if Congress does not raise the debt ceiling,
according to Treasury Secretary Janet Yellen.
Last week, the Republican-led U.S. House of Representatives
passed a bill that pairs $4.8 trillion of spending cuts with an
increase in the ceiling. But Biden and his fellow Democrats
insist Congress should raise the cap without conditions.
Scope also placed United States' S-1+ short-term issuer ratings
in local and foreign currency under review for downgrade.
Rating agencies Moody's and Fitch both have a triple-A rating
for the United States - the highest credit quality status they
can assign to a borrower.
S&P Global's sovereign rating for the United States is 'AA+',
the second highest rating by the agency. In its published report
from March last, S&P expected Congress to continue to raise or
suspend the debt ceiling, despite "political brinkmanship"
between the executive and legislative branches of government.
Scope Ratings has been in talks with the European Central Bank
to become one of its recognized agencies, joining Standard and
Poor's, Moody's, Fitch and DBRS.
(Reporting by Jose Joseph in Bengaluru; Editing by Sandra Maler
and Kim Coghill)
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