Fitch Ratings, one of the Big Three firms that grades countries ability to repay their debts, warned Tuesday that failure by U.S. Congress to raise the debt ceiling in a "timely" manner could prompt a lowering of the country's score.
The statement was prompted by the partial shutdown of the U.S. government after Democratic and Republican lawmakers refused to compromise on an extension of spending authority.
Fitch's opinion is important because the U.S. already has lost its triple-A rating with Standard & Poor's, which downgraded the country's creditworthiness in August 2011 after politicians nearly missed a deadline to raise the borrowing ceiling.
In the aftermath of that decision, the Obama administration sought to isolate S&P as an outlier, emphasizing that Fitch and Moody's, the other major credit-rating agency, left their ratings intact.
A decision by Fitch or Moody's to side with S&P could cause international investors to rethink the prevailing opinion that U.S. debt is the ultimate secure investment.
"If you can't govern yourself, how strong can you be?" said Jonathan Lewis, chief investment officer at Samson Capital Advisors LLC, a New York firm that manages investments worth $7-billion (U.S.).
The shutdown "is disheartening for anyone care about good governance in the United States of America," Mr. Lewis said in an interview.
The traders who make a living off short-term bets appeared mostly unfazed by the shutdown, triggered by Republican House Speaker John Boehner's insistence that any budget renewal include measures that would undermine President Barack Obama's 2010 health law.
The Democratic majority in the Senate refuses to consider anything but a "clean" extension of spending authority, and Mr. Obama says he would veto any attack on the Affordable Care Act.
The Standard & Poor's 500 Index was trading about 0.8 per cent higher over the lunch hour, and the Dow Jones industrial average had gained about 0.4 per cent.
The trading suggests investors saw an opportunity to make a profit on stocks that had drifted lower in recent days as the shutdown deadline loomed in Washington.
There was no indication at midday Tuesday of how long the government shutdown would last. The only obvious political movement was a continuation of the blame game that characterized Monday's dialogue between the two parties.
The intervention by Fitch could focus some minds. The firm said it was little bothered by the shutdown itself, as a relatively short one would have only a small impact on economic growth.
However, Fitch is troubled by what the failure to communicate says about the prospects for raising the debt ceiling.
Republicans have said they intend to use the vote to win concessions from the president, just as they are doing in the standoff over the budget. The Treasury Department estimates it will run out of ways to stay under the debt ceiling by around Oct. 17.
The shutdown "undermines confidence in both the budgetary process and critically in the prospect of the debt ceiling being raised in a timely manner to avert the risk of default on U.S. sovereign debt obligations," Fitch said.