The credit rating agency said it believes steps will be taken to raise or suspend the debt ceiling in time to avoid a default.
However, he said the failure of recent efforts to address the issue “indicates that the current stalemate could be among the longest since 2013.”
US Treasury Secretary Janet Yellen has warned that the government could run out of cash on October 18 if the debt ceiling is not raised or suspended, leading to the first default in history.
“We consider that reaching Treasury X date (October 18) without raising the debt limit is the main risk to the willingness and ability to pay of the US sovereign,” Fitch said in a report.
“If this seemed likely, we would review the sovereign rating of the United States, with probable negative implications,” he added.
Regarding a default, Fitch said it would “downgrade only affected instruments to a default rating level, while non-defaulted instruments that continue to operate would maintain their current ratings.”
He added that the United States would continue to have a limited ability to make payments beyond October 18, but that would depend on “the volatility of income and expenditure flows” and that prioritization could reduce the immediate risk of default.
Fitch has had a negative outlook on the AAA rating since July 2020.