Fitch Maintains Triple-A Rating After Debt Pact Passes

Ratings agency will keep a close eye on the nation's debt-reduction efforts, though.

The Fitch ratings agency on Tuesday said that Congress' last-minute agreement to raise the U.S. debt ceiling to avert a default will allow the country to keep its triple-A rating.

But Fitch warned that it will continue to review the country's long-term deficit profile to see if it still merits being listed along with more healthy economies in the exclusive AAA club of sovereign borrowers.

Fitch called the agreement to raise the $14.3 trillion debt ceiling -- allowing the Treasury to borrow more and cover its mounting bills -- "commensurate with its 'AAA' rating," meaning that "the risk of sovereign default remains extremely low."

The agreement shows that "despite the intensity and theater of political discourse in the United States, there is the political will and capacity to ultimately do the right thing," Fitch said.

However, it said it could continue to review the country's grade this month.

"The review will focus on the U.S. sovereign credit fundamentals relative to 'AAA' peers and medium-term economic and fiscal prospects" based on a long-term deficit-reduction plan that was a part of the debt ceiling hike package voted through Tuesday.

Fitch said the country's economic and financial foundation "remains strong" despite the grinding political battle over government spending and borrowing and near-stalled economic growth in the first half.

"The interest burden of federal debt is projected to remain moderate by historical standards and broadly in line with 'AAA' peers," it said.

But Fitch warned that the country needs to spell out and implement "a credible multi-year deficit-reduction plan."

Based on current trends, U.S. government debt at all levels will reach a large 100% of gross domestic product by the end of 2012 and continue to rise.

It called that "a profile that is not consistent with the United States retaining its 'AAA' sovereign rating."

Copyright Agence France-Presse, 2011

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