Fitch warns it may lower U.S. credit rating

WASHINGTON As the clock ticks down for lawmakers to raise the federal government's borrowing authority, credit rating agency Fitch warned Tuesday after markets closed that it may downgrade U.S. debt.

Fitch has placed its "AAA" U.S. credit rating on "rating watch negative," a step that would precede an actual downgrade. The agency said it expects to conclude its review within the next six months. The firm says it expects the debt limit will be raised soon, but adds, "the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default."

"The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.," Fitch said in laying out its reasons for the possible downgrade. "This 'faith' is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns."

Fitch is one of the three leading U.S. credit ratings agencies, along with Standard & Poor's and Moody's. S&P downgraded U.S. long-term debt to "AA" in August 2011.

The Treasury Department has said it will run out ways to pay the country's bills after that date, raising concerns that the U.S. could default on its debt for the first time.

Financial markets slid Tuesday as investors awaited signs of progress on a deal in Congress to reopen the government and raise the debt limit.