The Fitch ratings agency warned last night that it could cut the sovereign credit rating of the US from AAA, citing the political brinkmanship over raising the federal debt ceiling.
"Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a US default," the firm said.
Fitch put its opinion about the creditworthiness of US government debt on what its calls Ratings Watch Negative, a reflection of the increasing risk of a near-term default if the debt limit is not raised in time.
It gave itself until the end of the first quarter of 2014 to decide whether it will actually cut the rating.
But the rating agency reaffirmed its belief that an agreement to raise the debt ceiling will be reached, allowing the US government to pay its bills by borrowing beyond the $16.7 trillion limit currently in place.
Fitch is the only one of the three major credit rating agencies to have a negative outlook on the US sovereign credit.
Standard & Poor's downgraded the rating to AA-plus with a stable outlook during the last debt ceiling impasse, in August 2011. Moody's Investors Service rates US government debt at Aaa with a stable outlook.
Fitch reiterated that the delay in increasing the borrowing capacity of the US raises questions about the country's ability to honour its obligations.
The US Treasury has said that on or about October 17 the government will reach its borrowing limit, thereby putting at risk its ability to pay its bills.
Fitch is operating under the assumption that even if the debt limit is not raised before or shortly after October 17, there will be sufficient political will and capacity to ensure the US will honour its debts.
A Treasury spokesman said Fitch's decision is a reminder for US lawmakers that the United States is dangerously close to defaulting on its obligations.
Negotiations between President Barack Obama and congressional leaders cycled through a stop-start process again last night, but no agreement was reached to reopen the government and raise the debt ceiling.