No cut in U.S. debt rating despite deficit-deal failure, S&P says

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Standard & Poor’s signaled Monday that it has no plans to further cut its rating on U.S. debt, despite the inability of the congressional ‘super committee’ to reach a deficit-cutting deal.

S&P, which in August triggered a global market meltdown with its initial downgrade of U.S. debt to AA+ from AAA, said the super committee’s failure was “consistent” with the August rating cut.

In other words, it was already baked into the lower rating.

Stocks had fallen sharply worldwide on Monday, in part on fears that the U.S. could be facing another debt downgrade without a deficit deal. S&P made its announcement after markets had closed.

Later in the day, Moody’s Investors Service affirmed its Aaa rating on U.S. debt, although it kept its “negative” outlook on the rating. Moody’s had previously said that a failure by the super committee would not be a “decisive” factor in its rating assessment.

Although S&P kept its rating unchanged, it warned that it expected Congress to abide by the automatic caps on discretionary spending that are supposed to fall into place without a super committee agreement.

“If these [spending] limits are eased, downward pressure on the ratings could build,” S&P said.

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-- Tom Petruno