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S&P says it expects U.S. Congress to address debt ceiling on time By Reuters

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© Reuters. FILE PHOTO: The S&P Global logo is displayed on its offices in the financial district in New York City, U.S., December 13, 2018. REUTERS/Brendan McDermid

(Reuters) – S&P Global (NYSE:) Ratings said on Thursday it anticipates the U.S. Congress will address the debt ceiling in a timely manner, either by raising it or suspending it.

The credit rating agency warned of “severe, extraordinary” consequences for the financial markets if the debt ceiling is not raised or suspended.

“It would be unprecedented in modern times for an advanced G-7 country, like the U.S., to default on its sovereign debt,” S&P said in a bulletin.

S&P noted that during the last decade, Congress passed legislation to raise or suspend the debt limit five times during periods of political impasse.

The world’s largest economy had top credit ratings with all three major credit rating agencies until August 2011, when S&P cut its U.S. rating by a notch to AA-plus amid a previous round of political battles over debt, deficits, and the debt ceiling.

As for a potential government shutdown, S&P said it would not have a direct impact on creditworthiness.

On Thursday, Congress seemed poised to approve a bill to finance federal government operations through December. This would prevent a shutdown. [W1N2PJ02N]

Janet Yellen (U.S. Treasury secretary) has warned that the government might run out cash before Oct. 18 and could default on its obligations in an unprecedented move. In late July, the suspension of debt ceiling was lifted. However, Democrats and Republicans within Congress are still at odds.

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