US unlikely to default: Standard & Poor

WASHINGTON: The United States is unlikely to default on its debt obligations but its credit rating could still be lowered, an official from one of the country's largest credit rating agencies has warned.

Such an eventuality could arise if the US doesn't come up with an adequate plan to address spending and its soaring budget deficit, Deven Sharma, president of Standard & Poor's told a House panel Wednesday, according to the New York Times.

Deficit-reduction plans currently being considered in Congress could be enough to allow the United States to keep its triple-A credit rating, he said, but declined to specify what level of cuts would be needed to maintain the top-level credit rating.

News articles last week "misquoted" a July 14 S&P report as saying that Congress would need to achieve at least $4 trillion in spending cuts over 10 years to maintain the country's triple-A rating, the Times cited Sharma as saying.

A cut of $4 trillion, a number that is cited in the S&P report and that has been the focus of concern on Wall Street over the last two weeks, was "within the threshold" of what S&P thinks is necessary, Sharma said at a hearing by the Oversight and Investigations Subcommittee of the House Financial Services Committee.

But, according to the Times, he declined to draw a bright line, saying only that "some of the plans" currently being considered on Capitol Hill "could bring the US debt burden and the deficit level in the range of a threshold for a triple-A rating".