Public Power Daily Logo

Fitch: short-term government shutdown not seen as threat to municipal bonds; debt ceiling is a bigger worry


From the October 4, 2013 issue of Public Power Daily

Originally published October 4, 2013

By Jeannine Anderson
Editor

In an Oct. 1 report, Fitch Ratings said it believes the partial shutdown of U.S. government operations due to the lapse in appropriations will have minimal impact on U.S. municipal credits, if the shutdown is short-lived, as Fitch expects. However, if the shutdown is extended, the impact could become "pronounced," Fitch said.

The federal fiscal year began on Oct. 1. Because appropriations for federal discretionary programs have not been enacted, federal offices and services that are not specifically excepted are closed.

A bigger worry, Fitch said, is that Congress might fail to enact legislation raising the federal limit on debt. Defaulting on federal debt could create broader disruptions in the financial markets.

In a report released yesterday on that possibility, the Treasury Department was more pointed.

"A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo events of 2008 or worse," said the Treasury report.

The report is posted on the Treasury's website.

 

Ratings

Be the first to rate this item!

Please Sign in to rate this.

Comments

  Add Your Comment

(1000 of 1000 characters remaining)

Senior Vice President, Publishing 
Jeanne Wickline LaBella
202/467-2948
JLaBella@publicpower.org

Editorial Director
Robert Varela
202/467-2947
RVarela@publicpower.org

Editor, Public Power Daily
Jeannine Anderson
202/467-2977
JAnderson@publicpower.org

Communications Assistant
Fallon W. Forbush
202/467-2958
FForbush@publicpower.org

Manager, Integrated Media 
David L. Blaylock
202/467-2946
DBlaylock@publicpower.org

Integrated Media Editor 
Laura D’Alessandro 
202/467-2955 
LDAlessandro@publicpower.org