Moody's Warns That Any Fluff Deficit Reduction Plan Will Likely Result In Downgrade

Tyler Durden's picture

Since we don't have minutely Europe headlines, instead we get US ones. And here is the first official reaction to the McConnell plan from a rating agency. Since this Plan B is far more concrete than the Gang of Whatever Plan, Moody's will have absolutely the same to say about the previously noted 5 page talking points memo.

From Reuters:

A U.S. government backup debt plan to raise the country's debt ceiling and avoid imminent default could still lead to a downgrade of U.S. ratings in the next year or so, Moody's said on Tuesday.

Senator Mitch McConnell's "Plan B," increasingly seen as a "Plan A" in Washington, would avoid any immediate downgrade of the coveted U.S. triple-A rating, Moody's analyst Steven Hess told Reuters in an interview.

"But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don't seem to be very large," Hess said. "Therefore this plan might result in a negative outlook on the rating."