Moody’s said loan guarantees for Israel would be included in its review of its AAA rating of U.S. bonds ahead of a possible deficit crisis.
The credit rater said it was reviewing U.S. bonds for possible downgrade “given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations.”
In addition to U.S. institutions affected, Moody’s said in its July 13 release, “Bonds issued by the governments of Israel and Egypt that are guaranteed by the U.S. government were also placed on review for possible downgrade.”
The reference was to the bonds the two governments issue backed by U.S. loan guarantees, and not to Israel Bonds, the development securities that are not rated.
The Obama administration and the Republican-led U.S. House of Representatives are in negotiations over the terms of raising the debt ceiling. Republicans until now have resisted tax increases while pressing President Obama to accept greater cuts in spending.
The credit review could come as soon as this week, ahead of an Aug. 2 deadline to raise the debt ceiling.
Moody’s, along with Fitch and Standard & Poor’s, is one of the three leading credit raters.
