WASHINGTON -- The Fitch credit rating agency has warned that it is reviewing the U.S. government's AAA credit rating for a possible downgrade, citing the impasse in Washington that has raised the threat of a default on the nation's debt.
Fitch placed the U.S. credit rating on negative watch Tuesday, a step that would precede an actual downgrade. The agency said it expects to conclude its review within six months.
The announcement comes as House and Senate leaders face a Thursday deadline to raise the nation's $16.7 trillion borrowing limit. Fitch says it expects the debt limit to be raised soon. But it adds, "the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default."
A Treasury Department spokesman said Fitch's announcement "reflects the urgency with which Congress should act to remove the threat of default hanging over the economy."
Dow Jones industrial futures were essentially unchanged Tuesday evening. Fitch made its announcement after financial markets had closed.
Lawmakers spent most of Tuesday trying to reach an agreement to lift the government's borrowing limit and avoid an eventual default. The limit is a cap on how much debt the government can accumulate to pay its bills. The government borrows in most years because its spending has long exceeded its revenue.
Fitch is one of the three leading U.S. credit ratings agencies, along with Standard & Poor's and Moody's Investors Service.
S&P downgraded U.S. long-term debt to "AA+" in August 2011. But three months ago, it raised its outlook. In part, that was because of tax increases and spending cuts that have helped shrink the budget deficit. S&P has said it's unlikely to change its rating because of the debt-limit fight.
Moody's said last week that even if Congress failed to raise the limit by Thursday, Treasury could make its interest payments ahead of other bills, "leaving its creditworthiness intact."