Moody's threatens to strip US of AAA rating

Moody's will strip the US of its AAA rating if a deficit reduction deal is not struck in Congress, it has warned.

The ratings agency made the threat ahead of the US elections in November where the national debt will be critical in negotiations and swaying votes. Moody's said tax increases and spending cuts, due in early January, may not be enough to prevent a downgrade and an agreement on the debt over the medium term will need to be met or the ratings agency could join Standard & Poor's and strip the US of its AAA credit rating before the end of January 2013. The threat is likely to boost Republican hopes which have focused on the size of the debt pile, said the FT. A downgrade would also cau...