NEW YORK – The Fitch credit rating agency has warned that it is reviewing the U.S. government's top rating on credit for a possible downgrade, citing Thursday's looming deadline to increase the nation's borrowing limit.
![US credit rating: The Fitch Ratings building in New York]({"default":"http://newsbcpcol.stb.s-msn.com/amnews/i/de/9eea0d031363969eeb8df480f9/_h309_w628_m6_utrue_otrue_lfalse.jpg"} "Reuters Photo: Jessica Rinaldi, File")
Fitch has placed its "AAA" U.S. credit rating on "rating watch negative," a step that would precede an actual downgrade. The agency said it expects to conclude its review within the next six months.
Fitch says it expects the debt limit will be raised soon, but adds, "the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default."
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The federal government has been expected to exhaust its $16.7 trillion statutory borrowing limit on Thursday.
Fitch is one of the three leading U.S. credit ratings agencies, along with Standard & Poor's and Moody's. S&P downgraded U.S. long-term debt to "AA" in August 2011.
U.S. Treasuries prices held losses in late trading on Tuesday after Fitch's announcement.
Benchmark 10-year Treasury notes were 13/32 lower in price to yield 2.731 percent, up 5 basis points from late on Friday.
Interest rates on Treasury bills in the meantime held at their earlier highs. The rate on the T-bill issue that matures on Oct. 31 was last 0.5475 percent, up 23 basis points from late Friday.
The U.S. bond market was closed on Monday for the Columbus Day holiday.
