(Bloomberg) -- The tension around the US debt-limit negotiations ratcheted up after Fitch Ratings warned the nation’s AAA rating was under threat from a political standoff that’s preventing a deal. The DBRS Morningstar adjustment “reflects the risk of Congress failing to increase or suspend the debt ceiling in a timely manner,” the statement said. That spurred a selloff in risk assets like equities around the world, but ironically boosted Treasuries as investors sought out havens. Failure leading to a debt default would however lead Fitch to cut affected debt securities to a ‘D’ rating, with others downgraded to ‘CCC’ and ‘C’. S&P has retained a stable outlook on the rating during the latest fracas, anticipating a deal will be struck.
