Moody's, one of the three major credit-rating agencies, announced on Tuesday that the U.S. government will keep its prized AAA credit rating. However, the rating outlook is now negative.
The agency said that the Budget Control Act, which President Obama signed into law on Tuesday afternoon, provides for the "long-term fiscal consolidation needed to maintain the U.S. government debt metrics within Aaa parameters over the long run."
Moody's warned that a downgrade was possible if fiscal discipline weakened; if a new debt agreement was not enacted in 2013; if economic conditions deteriorated; or if there was an "appreciable rise" in the federal government's funding costs.
Another rating agency, Fitch Ratings, also affirmedthe government's AAA rating earlier, but it too warned of a negative outlook. The third agency, Standard & Poor's, has yet to announce a rating since the debt agreement's enactment.